Friday, 16 October 2020

What is a Home Loan? Know Required Documents and Eligibility

What is a home loan?

If you do not have the money to buy a house, then banks or non-banking finance companies (NBFCs) give you long-term loans.

Everyone's own home is a dream. It provides financial security, relief in income tax, an emergency support system, and living according to your choice.
What is a Home Loan? Know Required Documents and Eligibility
If you do not have the money to buy a house, then banks or non-banking finance companies (NBFCs) give you long-term loans. By paying a fixed amount to the bank or NBFC as a monthly installment, you return the principal amount and interest of the loan over a period of 10, 20 or 30 years. This is called a home loan.

A home loan proves to be very helpful in fulfilling your home's dream. You only need to raise 10 or 15 percent of the total value of the house. You can take a home loan from a bank or NBFC to buy your house on the basis of income from a job or business as soon as you are able to make the down payment.

The eligibility for taking a home loan is determined as follows:

A person can get a loan of 60 times his total income per month. If you have taken another loan (car or personal loan etc.) which is current, then the lending bank deducts his monthly installment from your income as a home loan.

If you want to take a home loan and your credit score is not correct or you have defaulted in the payment of any previous loan/loan, the bank can refuse to give the loan. You can fix your eligibility by taking a loan for a long period.

If you are a salaried employee or you are a private business person, then the eligibility of loan is different for both. Generally, banks consider 40 percent of your total monthly income as necessary for personal expenses. After this, home loan is given according to the remaining amount.

For example, if your monthly income is Rs 60,000, then the bank believes that your personal expenses will be Rs 25,000 a month. If you have not taken any other loan like car or personal loan, then you can get up to 35-40 lakh rupees as a home loan at an interest rate of 9% per annum for 20 years.

Why take a home loan?

By taking a home loan, you actually have three facilities.

  • Buying property in terms of investment
  • Savings in income tax
  • Living comfort

If you buy your house home by taking a home loan, then the value of your house keeps increasing over time. It is actually a type of investment as well.

However, the pace of property prices may vary depending on the connectivity of the area, demand-supply situation and income of the people living there.

The amount repaid as a monthly installment of a home loan has both principal and interest.

If you think according to the principal, then under Section 80C of the Income Tax Act, you can get relief in income tax on payment of Rs 1.5 lakh in a year.

With this, for the amount you have paid in the form of interest in the home loan installment, there is a separate income tax exemption on the amount of up to two lakh rupees in a year.

If you live in your home, then you can pay full attention to your work by staying free from the hassle of home shifting, in any way, job or business.

Documents required while taking home loan

It is necessary to collect all the necessary documents before getting a home loan from the bank for the house.

If any necessary documents are not attached to your application, then your application can also be canceled. presenting in this regard, a checklist means a list of required documents.

Common documents for all applicants

Identification document

Driving license, Aadhaar card, PAN card, voter id, passport, ration card, photo of applicant verified While delivering on behalf of an authorized government official or letter from the applicant's employer or other bank acceptance letter.

Address document

Driving license, Aadhaar card, voter id, passport, ration card, bank passbook, utility bills (telephone, Of electricity, water, gas, etc. (It should not more than two months old).

Age certificate

Birth certificate, or school/college certificate indicating age (especially class X certificate).

Income certificate

Being self-employed or a businessman: A brief statement of his work or occupation, balance sheet, account statement, Proof of Income Tax, Photo, Advanced Tax paid during the last three years verified by Chartered Accountant.

If the receipt of the work, registration documents related to work, documents of profession tax, bank loan receipts, Proof of investment (proof of fixed deposits, shares, or other fixed assets).

On employment: Proof of income (recent payslip or Form 16), appointment letter, salary account bank's Statements, letters from the employer, documents of income tax return, proof of investment, photographs, and loans of any kind Or statement of immovable property.

If you are buying a flat from a builder, then the necessary documents

  • Original copy of the document of the agreement between the buyer and the builder.
  • Copy of Development Agreement between the owner and the builder of the land.
  • Documents of ownership of the Chairman.
  • Copy of the order issued under the Urban Land Enclosure Act. Property registration card in relation to the project under construction, in which survey from the land-related administration information about the number, area, and dates required is given.
  • Index 2 of the agreement between the buyer and the builder, which is issued by the sub-registrar. In which the names of the buyer and seller are given.
  • No Objection Certificate on behalf of Collector.

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