Introduction

HOME LOAN simply means a sum of money borrowed from banks or financial institutions for constructing or purchasing a residential property.

• 90% of agreement value if loan < ₹30,00,000
• 80% for ₹30,00,001–₹75,00,000
• 75% when > ₹75,00,000

Purposes include: construction, purchase (new/old), NA plot + construction, or balance transfer.

Product Variants

1. Term Loan: standard EMI across tenure.
2. Home Loan Overdraft: deposit surplus to offset interest; known as Smart Home, Home Saver, etc.
3. NRI Home Loan: for eligible Non-Resident Indians.
4. Pre-approved Loan: confirm eligibility before registration fees.
5. Flexi Loan: higher eligibility for young earners.
6. Balance Transfer: move to a better lender.
7. Top-up: additional secured personal-use funds over existing loan.

Banks vs NBFCs

• Rate linkage: Banks to Repo (faster pass-through); NBFCs to RPLR.
• Interest calc: Banks – Daily Reducing (usually), NBFCs – Monthly Reducing.
• Overdraft: More common/flexible with Banks.
• Process speed: NBFCs often faster; Banks usually more conservative.

Eligibility Criteria

• Age: Salaried 21–60; Self-employed up to ~70 at maturity.
• Location tie (property/residence/work) to loan city.
• LTV caps: 90% / 80% / 75% (excl. stamp & registration).
• CIBIL 700+ and clean repayment track preferred.
• Stable income & employment; reasonable fixed-obligation ratio.

When should you transfer a loan?

• Reduce EMI to improve cashflow (especially with floating rates).
• Current lender isn’t proactive in passing rate cuts.
• Service issues / experience gaps.
• Need a top-up or overdraft product a current lender doesn’t offer.
• Prefer Repo-linked discipline at a bank vs NBFC.

A piece of advice

• Check eligibility & CIBIL before paying stamp/registration.
• Get the offer in writing; read fees/conditions.
• Keep EMI affordable; use voluntary pre-payments.
• Enable ECS/Auto-debit to avoid delays.
• Cover with a basic term insurance.
• Don’t chase only “lowest fees” – view rate linkage + product features.
• Include spouse/co-owner where sensible (eligibility, tax, better rates).

Common reasons for rejection

• Poor credit history; cheque bounces.
• Low valuation / weak property condition / missing OC.
• Unstable income/job, excessive existing EMIs.
• Unregistered chain agreements; legal gaps; blacklisted builder/area.

Selecting the best lender

• Repo-linked floating rates preferred; transparent margin.
• Daily-reducing interest, and overdraft availability.
• Reasonable processing & admin charges.
• Tenure up to 30 years (subject to age).
• No prepayment penalty on floating-rate individual loans.

Benefits

• Tax – Section 24 (interest) + 80C (principal) + 80EE (first-time).
• Liquidity – keep savings invested; use overdraft/smart home.
• Top-up – low-cost personal use vs. unsecured loans.
• Bank due diligence on title & structure adds safety.

Schedule of charges (typical)

• Processing fees: ₹10,000 – 0.50% (bank-wise).
• Legal, valuation & structural audit (older buildings): as applicable.
• Franking/NOI/CERSAI, property insurance (post-sanction).
• Penalty: Late/penal interest; no prepay penalty on floating for individuals.
• Conversion fee for rate adjustment (if requested): usually ₹5k–₹10k + taxes.

To-do right after disbursement

• Preserve original sanction letter.
• Activate net-banking for loan account, statements & certificates.
• Obtain and keep List of Documents (LOD).
• Collect/amend amortization schedule.
• Track tax certificates (provisional & final).

To-do after paying it off

• Collect all original title deeds per the LOD.
• Get original No-Dues / Closure NOC & retrieve unused PDCs.
• Verify CIBIL shows the loan as “Closed”.
• Ensure CERSAI charge is released.

Tax benefits (summary)

• Sec 80C – Principal up to ₹1,50,000 p.a. (post possession).
• Sec 24(b) – Interest up to ₹2,00,000 p.a. (self-occupied). Balance can be carried forward if let out (as per limits).
• Sec 80EE – Additional ₹50,000 for first-time buyers (subject to rules).

Consult your tax advisor for personalized eligibility and latest limits.