Home Loan

Why should you buy a home 

A home brings warmth, security, happiness, and helps create joyful memories of the time that you spend with your family. All homeowners speak about their homes with pride and a sense of identity. You, too, can experience the pride of being a homeowner with some planning.

“At HDFC Bank, we understand that a home is not just a place to stay. It is much more than that. It is a warm little corner of the world that is yours, tailored to your tastes and needs. It is the place where you celebrate the joys, deal with the sorrows and enjoy the journey called life. There is no place like home and with HDFC Bank Home Loans you can gather hopes, achieve your dreams and create memories in your own space.”

Advantages Of Owning A House

1. You have the security and permanency of your own home; you don’t need to deal with a landlord and the hassles that may come along with it.
2. Your home is a symbol of your success and accomplishments.
3. Your home gives you a sense of emotional security; it’s your very own space where you can simply be yourself.
4. Your home is an asset with the potential to appreciate in value over time. It makes sense not to delay your home purchase since this may result in higher cash outlays due to value appreciation of property

Benefits of home loan

• When you plan to buy property, the first thing that comes to mind is the need to have sufficient funds for this purchase. Buying a house is usually the largest asset that an individual purchases. It can take years to accumulate sufficient funds for this purchase. 
• But, you don’t need to wait this long. You can simply take a loan to purchase your home. This way, you can enjoy the benefits of owning a house today instead of waiting for years. 
• A home loan is offered by lenders with the home mortgaged as security. The lender also carries out due diligence of the property by verifying all title deeds and other property-related documents. While this doesn’t absolve the buyer from the responsibility of carrying out an independent check of the property documents, it does gives some added comfort of a clear title of the property
• Home loan providers tailor your home loan repayment to suit your present and future income patterns. 
• Interest rate levied on this loan is very affordable and repayment is done in the form of Equated Monthly Instalments (EMIs). EMI is a fixed amount payable every month and is made up of part principal repayment and part interest payment. Home loans are available for long tenures spanning up to 30 years.

What Are Pre-Approved Home Loans?

• In-principle approval for a loan given on the basis of borrower’s income, creditworthiness, and financial position. It is valid for a limited period, usually 3 months. Generally, pre-approved loans are taken prior to property selection. Bank will disburse the home loan once the property is selected, the property titles are verified, and the customer has complied with all the conditions laid down in the in-principle approval as per the internal policies of the lender (developed in lines with the regulatory requirements).
• A pre-approved loan will give a clear idea of the budget for home purchase. Accordingly, if you have not selected your property yet, you can focus your search on properties as per the budget without wasting time and effort in considering unreasonable deals.
• A pre-approved loan offer in hand can give you better bargaining power with the developer or property seller.
• The turnaround time on the entire loan process (from loan approval to disbursement) is also quicker. Quick processing of the loan facilitates easy purchase of property. You do not have to miss out on a good property deal or worry about an increase in prices.

 Tax benefits on homes loans

• The buyer will use the property either for self-occupation or the property will remain unoccupied due to his employment, business or profession carried on at any other place, he has to reside in a property that does not belong to him.
• The buyer will not let out whole or any part of house property for any period of time during the year or will not derive any other benefit from the said property.

Interest on home loan  :  Deduction of interest on home loan is allowed up to ₹2,00,000 (Sec 24B of IT Act)

Principal repayment : Deduction is allowed upto ₹1,50,000 (Sec 80C of IT Act)

Is It A Good Time To Buy Property?

• ‘Home’ brings to mind comfort, security and joy. If you are single, your home becomes a place where you rest, work, exercise, cook, invite friends, and so on. If you are married, giving your family a home that they can call their very own will give them a sense of security and comfort. 
• Home loans are available at affordable interest rates. They also come with a number of tax benefits. 
• For affordable housing, the government offers incentives, such as the interest subsidy scheme called Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (URBAN)-Housing for All, for purchase/ construction/ extension/ improvement of house to cater to Economically Weaker Section (EWS)/Lower Income Group (LIG)/Middle Income Group (MIG). Under this scheme, first-time home buyers can get interest subsidy up to Rs.2.67 lakh on their home loan.
• More importantly, your home is an asset that has the potential to appreciate in value over time. Buying your home today will help you build your home equity with the potential property appreciation over time.

 Types Of Properties

• 1. New house, which means purchasing directly from the builder, development authorities, or cooperative housing societies.

• 2. If not ready to shift immediately, he can opt for an Under Construction home. This gives the advantage of paying for the home in instalments based on the stage of construction.
• 3. Resale house, i.e., purchasing a property from existing owners, if priority is the location where there is no new construction.
• 4. Plot of land and construct home based on specific requirements.
• 5. Bungalows/villas are available in various locations across the country. 

Where to buy a house?

Understand the requirement & psychology of the borrower:

1. daily schedule, 
2. work location, 
3. the need for good schools for your children, 
4. a hospital in the area for medical emergencies. 
5. good access to public transport (metro stations, bus stops, train stations, etc.) 
6. quiet neighbourhood 
7. market nearby. 

What is a home loan?

• Becoming a homeowner requires sufficient funds which can take years to save. However, you don’t need to wait this long. You can simply take a home loan to purchase your house. This way, you can enjoy your own space today instead of waiting for years. The interest rate levied on this loan is very affordable. Repayment is done in the form of Equated Monthly Instalments (EMIs).
• Home loans are available for long tenures spanning up to 30 years. Taking a home loan also makes you eligible for a number of tax benefits (as may be applicable subject to the provisions of the Income Tax Act, 1961 (“ITA”) amended from time to time). Hence, availing home loans is one of the most convenient ways to make your home purchase.

What is EMI?

• EMI (Equated Monthly Instalment), is the amount you pay each month to the lender.
• Each EMI comprises of interest payable on your home loan and the principal repayment. 
• Although the EMI remains a fixed sum throughout the loan tenure, during the initial years, the interest component of the EMI is higher compared to the principal component. 
• When you are closer to completing your home loan repayment, the situation reverses, i.e., the principal component of your EMI is higher while the interest component becomes lower. 
• To calculate the EMI on your home loan, you can use our Home Loan EMI Calculator..

 Home Loan Pricing

Floating rate home loans

Also referred to as Adjustable Rate Home Loan (ARHL). Interest rate linked to the Bank’s benchmark rate, which, in turn, moves in sync with the market interest rates. If there is a change in the benchmark rate, the interest rate on the loan also changes proportionately.

Floating rate home loan is opted in the following circumstances:

• If you are expecting interest rates in general to fall over time, opting for a floating rate loan in such a scenario may result in the interest rate applicable to your loan falling too, thereby reducing the cost of your loan.
• Floating rate loans are suitable for those who are usually unsure about interest rate movements and would prefer to go with the market rates.

 Combination rate home loans

Interest rate is fixed for a specified period (usually 2-3 years) after which it converts to floating rate. The fixed interest rate is usually slightly higher than the floating rate.

Combination rate home loan is opted in the following circumstances:

1. If you are comfortable with the EMI you are committing to pay for the period when the interest rate is fixed. It may not exceed 25-30% of your take-home monthly income.
2.  You see a scenario of rising interest rates and, therefore, consider to lock in your home loan at the existing rate for the first 2-3 years of the loan (based on the period the lender permits).

 It is normally difficult to predict future home loan rates. It may so happen that the housing loan interest rates move contrary to your expectation, which may leave you with an unfavourable interest rate option on hand. Hence, floating rate home loans tend to be more popular.

 Capital Charge on HL

 Common  Frauds Deducted in Mortgage Loans

• Impersonation 
• Fabricated Income Documents/ CA cert. /Employer’s Letter
• Disbursement Instrument encashed by third party.
• Title Documents found forged
• Overvaluation of property
• Multiple Financing
• Cancellation of booking of flats
• Sale of property without loan clearance
• Misrepresentation of end use of funds.

Home Loan Process Step by Step

Step 1: Application of the Home Loan

• Borrower  must submit a duly filled application along with important documents such as identity proof, address proof, income proof, etc. 
• If he is applying with a co-applicant, he must submit the same set of documents of the co-applicant, and they must sign the application form too.
• If Borrower has already short-listed a property, he must provide the details in the form and submit photocopies of the property-related documents for legal and technical assessment.
• He can also apply online for a HDFC Bank Home Loans by visiting www.hdfc.com

 Step 2: Loan Approval

• After the borrower submits the form and the documents, the appraisal process begins. Bank evaluate his eligibility based on specific information relating to his income, liabilities, credit score, etc.
• If borrower is self-employed, in addition to the above information, Bank also assess the sustainability of business, and stability of cash flow.
• At this stage, Bank conduct a field credit investigation, wherein Bank’s representative may call, or visit his home/office, to validate the information he has provided in the application form.
• Based on assessment, Bank will determine loan eligibility.

Step 3: Legal & Technical Verification

Borrower must submit relevant copies of the property-related documents. These include: 

1. Complete chain of title documents (in case of a resale property), 
2. Sale agreement with the builder, 
3. NOC (no-objection certificate), 
4. OC (occupancy certificate), and any other document that Bank may require to verify. 

Bank will also carry out a technical inspection of the property to check if the property is constructed as per the sanctioned plans and other applicable norms and to assess the market value.

Step 4: Home Loan Sanction

After determining borrower’s loan eligibility and verifying the legal and technical aspects of the property, Bank will communicate the loan amount through a sanction letter. The sanction letter will contain the following details:

• Total sanctioned loan amount.
• Home loan Interest rate
• Type of interest rate applicable (fixed or floating interest rate)
• Loan Tenure
• EMI (as applicable) payable
• Validity of the sanction letter
• Special Conditions (If any) to be fulfilled before disbursement
• Other Terms and Conditions.

Step 5: Home Loan Disbursement

• After carrying out credit, legal and technical verification, Bank would require the borrower to submit the original title documents. Once he submits the said documents and raise a disbursement request, Bank will initiate the process of preparing disbursement cheque. 
• Borrower will need to sign the loan agreement before the lender hands over the disbursement cheque to him. 
• Make sure that Borrower reads the most important details such as interest rate, interest type, loan tenure, EMI, and other terms and conditions carefully before signing the loan agreement.
• If the property he wants to purchase is under construction, Bank will disburse the sanctioned amount in instalments to the developer based on the progress of construction.

 DOCUMENTS

Home Loan Documents For Salaried

• Filled in application form.
• PAN card (this is mandatory to complete KYC).
• Proof of identity and residence – Passport, voter ID or driving license
• Proof of income: Salary Slips (Last 3 Months);
• Bank Statements showing salary credits (Last 6 Months).
• Latest Form-16 and IT returns

Home Loan Documents For Self-Employed

• Filled in application form.
• PAN card (this is mandatory to complete KYC)
• Proof of identity and residence (Passport, Voter ID, or Driving License)    
• Proof of Income
• Income Tax Returns along with computation of income for the last 3 Assessment Years (of both the individual and the business entity and attested by a CA), 
• Last 3 years’ Balance sheet and Profit & Loss A/c Statements, with Notes to accounts/Annexures/Schedules (of both the individual and the business entity and attested by a CA), 
• Last 6 months’ Current A/c Statements of the business entity and 
• savings Account Statements of the individual.

 Property Related Documents

For New Homes:

• Allotment Letter / Buyer Agreement, and 
• Receipt(s) of payment(s) made to the developer.

 For Construction :

• Allotment Letter / Buyer Agreement 
• Receipt(s) of payment(s) made to the developer; 
• Title Deeds of the Plot; 
• Proof of number of encumbrances on the property; 
• Copy of the plans; approved by the Local Authorities, 
• Construction estimate by an Architect / Civil Engineer.

 For Resale Homes:

• Title Deeds including previous chain of the property documents; 
• Receipt(s) of initial payment(s) made to the seller, 
• Copy of the Agreement to Sell (if already executed).

 Other Documents:

• Own Contribution Proof; 
• Employment Contract / Appointment Letter (in case current employment is less than year old); 
• Bank Statements from the last 6 months, showing repayment of any ongoing loans; 
• Passport size photograph of all the applicants / co-applicants to be affixed on the application form and signed across, 
• a cheque for the processing fee.

 Factors that determine home loan eligibility

 Housing loan eligibility of the borrower  depends on a number of factors such as: 

• Present age and retirement age, 
• Financial position, 
• CIBIL score, 
• Savings,
• Investments, 
• Employment status, 
• Home loan eligibility can be increased by adding an immediate family member with an independent income source as a co-applicant. Co-applicant can be salaried or self-employed. 
• Co-applicant needn’t be a co-owner of the property. 
• All co-owners must be co-applicants. 

 Maximum Funding**

*Subject to market value of the property and repayment capacity of the customer, as assessed by HDFC Bank.

Home Loan Disbursement

 Bank will disburse the loan amount usually on completion of the following:

• The property has been technically appraised;
•  All legal documentation has been completed and title clearance has been done;
•  Borrower has paid his own contribution in full (i.e. made the down payment).

 Home Loan Disbursement - online

 Request for home loan disbursement can be made offline or online. To make request offline, you need to visit the office/branch. Making  disbursement request online:

• Log in with your user ID/loan account number and password
• Click on the ‘disbursement request’ tab
• Upload your own contribution details (upload receipts)
• Update the status of the property (ready or under construction).

1. 1. For an under-construction property, fill in the details of the stage of construction and upload the necessary documents including builder’s demand letter, architect’s certificate, etc.
   2. For ready property, simply add the demand letter date. You will then need to add the payment details (the payee’s account details); this would be the builder in case of an under-construction property; it would be the seller in case of a ‘resale’ property.

• The loan will be disbursed either in stages or in full depending on the stage of completion of construction.
• Bank shall consider only the construction stage based on the regulations issued by the Reserve Bank of India (RBI)/ National Housing Bank (NHB) and not any instalment payment timelines stipulated by the builder.In case of full disbursement, EMI payments may start from the month following the month in which the full disbursement has been made.
• In case of partial disbursement, Borrower  may need to pay pre-EMI (which is only the interest component) till full disbursement is made after which the EMI payment starts.

 Mortgage registration

• A home loan is offered by the Bank with the home taken as security. 
• Until repayment of the home loan, the title to the property resides with the Bank. 
• Similar to property registration, in some states such as Maharashtra, Rajasthan, etc., loan documents also need to be registered with the sub-registrar on payment of stipulated fees. Stamp duty payable on security creation/deposit of title deeds/memorandum of deposit of title deeds differs from state to state.

 Home loan insurance

• Life can be unpredictable. Borrower can buy insurance for the property against which the loan is secured and/or a life insurance.
• In the case of any unfortunate event, the insurance company will pay off the outstanding home loan and Borrower’s loved ones will continue to have the security of owning a home.
• Taking a home loan protection plan while Borrower is paying your home loan EMIs is essential. It protects him from financial losses in case of any damage to home or if he is unable to continue paying your EMIs. In an unfortunate event, the home insurance policy helps repay his home loan and protects you from financial losses. 

 While HDFC Bank does not insist on taking property / life insurance in any manner whatsoever, HDFC Bank helps customers understand the benefits of taking an insurance.

 RAPID FIRE TEST

 What is Home Loan

Home loan is a form of secured loan that is availed by a customer to purchase a house. The property can be an under-construction or a ready property from a developer, purchase of a resale property, to construct a housing unit on a plot of land, to make improvements and extensions to an already existing house and to transfer your existing home loan availed from another financial institution to HDFC Bank. A housing loan is repaid through equated monthly installments (EMI) which consists of a portion of the principal borrowed and the interest accrued on the same.

How do I apply for a Home Loan online

 HDFC Bank Home Loan can be applied online in 4 quick and easy steps:

1. Sign Up / Register

2. Fill in the home loan application form

3. Upload Documents

4. Pay Processing Fee

5. Get Loan Approval

Visit https://portal.hdfc.com/ 

What is the Maximum Amount Home Loan

You are required to pay 10-25% of the total property cost as  ‘own contribution depending upon the loan amount. 75 to 90% of the property cost is what can be availed as a housing loan. In case of construction, home improvement and home extension loans, 75 to 90% of the construction/improvement/extension estimate can be funded.

What are the factors that determine Home Loan Eligibility

• Income and Repayment Capacity
• Age
• Financial Profile
• Credit History
• Credit Score
• Existing Debt/EMIs

 Different Types of Home Loans

• Home Loans
• Plot Purchase Loan
• Balance Transfer Loan
• House Renovation Loans
• Home Extension Loan

 Maximum time period allowed for repayment of Home Loan

• The maximum repayment tenure depends on the type of housing loans you are availing, your profile, age, maturity of loan etc.
• For home loans and balance transfer loans, the maximum tenure is 30 years or till the age of retirement, whichever is lower.
• For Home Extension Loans, the maximum tenure is 20 years or till the age of retirement, whichever is lower.
• For Home Renovation and Top-Up Loans, the maximum tenure is 15 years or till the age of retirement, whichever is lower.

 When does Home Loan EMI starts

• EMI's begins from the month subsequent to the month in which disbursement of the loan is done. 
• For loans for under-construction properties EMI usually begins after the complete home loan is disbursed but customers can choose to begin their EMI as soon as they avail their first disbursement and their EMI’s will increase proportionately with every subsequent disbursement. 
• For resale cases, since the whole loan amount is disbursed in one go, EMI on the whole loan amount start from the subsequent to the month of disbursement

Whether Home Loan Guarantor is required

No. You don’t need to have a guarantor for your home loan. You will only be asked for a guarantor in certain situations, namely:
 

• When the primary applicant has a weak financial standing
• When the applicant wants to borrow an amount that is beyond their eligibility.
• When the applicant earns less than the established minimum income criteria.

PMAY Scheme

The Pradhan Mantri Awas Yojana (PMAY) (URBAN)-Housing for All was a mission that was launched by the Government of India with the aim of boosting home ownership. The PMAY scheme caters to Economically Weaker Section (EWS)/Lower Income Group(LIG) and Middle Income Groups (MIG) of the society, given the projected growth of urbanization & the consequent housing demands in India.

 Benefits:

Credit Linked Subsidy Scheme (CLSS) under PMAY makes the home finance affordable as the subsidy provided on the interest component reduces the outflow of the customer on the home loan. The subsidy amount under the scheme largely depends on the category of income that a customer belongs to and the size of the property unit being financed.

Why Apply for a Home Loan with HDFC Bank

• HDFC Bank is one of India’s leading private banks and was among the first to receive approval from the Reserve Bank of India (RBI) to set up a private sector bank in 1994.
• As of March 31, 2023, the Bank had a nationwide distribution network of 7,821 branches and 19,727 ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 3,811 cities / towns. HDFC Bank’s end-to-end digital home loan application process, integrated home loan branch network across the county and 24X7 online assistance can make your home owning journey a memorable one.