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This amount can now be used as the installment amount and your eligibility can be reverse-calculated. This is easy. The
following example will demonstrate the eligibility calculations.
At an interest rate of 9%, the monthly installment of a Rs 1 lakh, 20-year loan is Rs 900. Banks then calculate your
eligibility using a simple formula:
In actual practice, however, it is difficult to estimate the monthly expenses of each borrower separately. Which is why
banks use a pre-determined percentage of your income as being available for paying the loan installment, based on their
past experience as well as available household expenditure data. For instance, a bank may assume that if your income is
Rs 20,000 per month, 40 per cent of that (i.e. Rs 8000) will be available for repayment. Then, they calculate the loan
eligibility accordingly.
This percentage also varies depending on your income on the assumption that those with higher incomes should be able
to spare a higher percentage of their income for repayment. Hence, the bank could have slabs like:
Rs 9, 999: 35%
As per this formula, if your monthly income is Rs 10,000, the loan eligibility is:
ICICI Bank offers Home Loans to Resident as well as Non Resident Indians
Overview
Your Home is a place where you relax after coming back from your day’s tiring work, it is that place where you can give
time to your family & spend beautiful moments with them. To acquire a home which can be christened your “Own House”
is a life-time decision & has to be taken with a lot of planning & requires huge finances. Your Dream Home is not very far
away with a Home Loan which will fulfill your Dream into a reality. We at Deal4Loans are working constantly to get you
the BEST Loan Deal & have brought a small guide which would answer some important questions related to Home Loan &
help you decide your loan deal.
Home Loan is a Secured Loan offered against the security of a house/property which is funded by the bank’s loan, the
property could be a personal property or a commercial one. The Home Loan is a loan taken by a borrower from the bank
issued against the property/security intended to be bought on the part by the borrower giving the banker a conditional
ownership over the property i.e. if the borrower is failed to pay back the loan, the banker can retrieve the lent money by
selling the property. Get more Information on home loan section click Articles about Home Loan and Home Loan must
read.
SBI Home Loan: Before borrowing any loan borrower compare interest rates. Generally people prefer to take SBI Home
Loan because SBI (State bank of India) is main centralized and national bank. SBI provides loan at comparatively low
interest rate.
HDFC Bank Home Loan: HDFC stands for Housing Development Finance Corporation. This unit is for housing
development. HDFC provides loan and low interest rate. And you are facilitated with ease repayment option. HDFC gives
you an option of easy EMI. Because of flexible feature and transparent policy, most people prefer HDFC home Loan for
their requirement.
ICICI Bank Home Loan: ICICI Bank offers a wide range of Home Loan products, designed to meet the requirements of
customer. : ICICI Bank offers Doorstep service, Speedy loan sanction, Simplified documentation and Loan amounts
ranging from Rs. 2 lakh to Rs. 3 crore Rupees only.
There are different types of home loans available in the market to cater borrower’s different needs.
• Home Purchase Loan : This is the basic type of a home loan which has the purpose of purchasing a new house.
• Home Improvement Loan : This type of home loan is for the renovation or repair of the home which is already
bought
• Home Extension Loan : This type of loan serves the purpose when the borrower wants to extend or expand an
existing home, like adding an extra room etc.
• Home Conversion Loan : It is that loan wherein the borrower has already taken a home loan to finance his current
home, but now wants to move to another home. The Conversion Home Loan helps the borrower to transfer the existing
loan to the new home which requires extra funds, so the new loan pays the previous loan & fulfills the money required for
new home.
• Bridge Loan : This type of loan helps finance the new home of the borrower when he wants to sell the existing home,
this is normally a short term loan to the borrower & helps during the interim period when he wants to sell the old home &
want to buy a new one, It is given till the time a buyer is found for the old home.
• Home Construction Loan : This type of loan taken when the borrower wants to construct a new home.
• Land Purchase Loan : It is that loan which is taken to purchase a land for construction & investment purposes.
Generally the documents required to processing your loan application are almost similar across all the banks; however
they may differ with various banks depending upon specific requirement etc. Following documents are required by
financial institutions to process the loan application:
• Age Proof
• Address Proof
In case of Salaried
• Copies of pay slips for last few months and TDS certificate
In case of Self-employed
• Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of association if it
is a company
Acquiring a Home Loan doesn’t only involve the cost of home loan interest rates but it also includes other charges & fee
accompanying at various stages of taking the Home loan. You must consider all these charges while comparing the cost
structure across banks. Following is the detailed fee structure incurred by banks at different loan stages:
• Processing Charge : It is a fee payable at the time of submitting the loan application to the bank which is normally
non-refundable. The fee ranges between 0.5 per cent and 1 per cent of the loan amount.
• Administrative Fee : It is a fee incurred by banks at the time of loan sanction; there are few banks who have
removed this fee so you must check it with all the banks.
• Prepayment Penalties : When the borrower pre-pays the loan before the loan tenure, banks charge a penalty which
usually varies between 1 per cent and 2 per cent of the pre-paid amount.
• Legal Charges : Banks also incur some charges from the customer for legal and technical verification of the property.
• Delayed payment Charges : When there is a delay in the payment of your EMI, banks charge a late payment fee
from the borrower which normally ranges from 2% to 3% of the EMI.
• Cheque bounce charges : Banks charge between Rs. 250 and Rs. 500 for every bounced cheque towards the loan
payment because of lack of funds in your account.
The borrower’s eligibility of getting a home loan depend upon his/her repayment capacity & the banks establish this
repayment capacity by considering various factors such income, spouse's income, age, number of dependants
qualifications , assets, liabilities, stability and continuity of occupation and savings history. You can now check your
eligibility for Home Loan through our Home Loan Eligibility Calculator
Deal4loans has brought in the Home Loan Eligibility Factors by banks
• Credit History : Your chances of getting a home loan are increased if you have a good credit history which is known by
banks by checking the borrower’s Cibil score. Now it is very hard to get a loan from another bank when you already have
a bad debt with one bank.
• Clubbing of income : Your eligibility to take a home loan will augment when you club your income with your spouse’s
income, bank in this case will calculate your eligibility on the basis of the clubbed income of both the applicants. You can
club incomes of spouse, children & parents staying with you and having regular income.
• Enhance your loan tenure : Longer is the loan tenure, lower will be the EMIs which further increases the repayment
capacity of the borrower & in turn enhances the loan eligibility.
• Step-up Loan: In this type of loan EMIs remain low in the beginning & increase gradually as and when the borrower’s
spending power increases. Therefore lower EMIs in the initial years enhances the borrower’s ability to pay & further
increases the loan eligibility
• Increase the down payment : You must know that in a home loan bank finances only 85 to 90% for the property &
the rest amount has to be funded by the borrower. You should increase the down payment if you have more than
required amount which will mitigate your debt considerably.
The home loan borrower enjoys Tax Benefits on both Interest paid & the Principal re-paid. Under Section 24(d) of Income
Tax, the deduction of interest payable on the home loan is up to a maximum of Rs. 1, 50,000.
Under Section 80(c) of Income Tax, Principal amount for the repayment of loan along with other savings & investments is
eligible for tax deduction up to a maximum limit of
Rs. 1, 00,000.
Owning a home gives a feeling of stability in life. However, with the steep rising prices of property in India, buying a house at a go
is not a very easy task. However, this process has been made considerably easy by the home loans being granted by the
umpteen numbers of Housing Finance companies and nationalized and private banks in the country. Thanks to swelling
competition in the housing loan industry, the home loan process in India has become significantly streamlined. Despite shaking off
the tag of a long and tedious documentation process, the housing loan procedure still requires one to go through certain
mandatory stages. Read on to explore the basics of the home loan process in India.
After choosing a particular home loan, the customer submits the application form to the housing finance company (HFC) along
with other relevant documents as required by the HFC. They comprise documents to establish income, age, residence,
employment, investments, etc. The customer also needs to hand over a cheque for payment of an up front (non -refundable)
processing fee of about 0.5-1% of the loan amount to the HFC.
In the next stage, HFCs validate the information provided by the customer on the application form. They usually conduct checks
on the residential address of the customer, the place of employment of the customer, and credentials of the employer. Some
HFCs may insist on a personal interview with the customer and perform a reference check on the references provided by the
customer on the application form.
After due appraisal of customer profile, a sanction letter is issued which contains details such as loan amount, rate of interest,
annual / monthly reducing balance, tenor of the loan, mode of repayment and general terms and conditions of the loan. This is the
actually the approval of the money lending procedure by the company. However, the money is sanctioned only after the
documents and the property on behalf of which the loan is being granted is thoroughly verified.
Submission Of Documents
Once the sanction letter is passed, the customer is required to leave the entire set of original documents pertaining to the property
being purchased with the HFC as security for the loan amount sanctioned. These documents remain in the custody of the HFC till
the time the loan is fully repaid. Once the documents are handed over to the HFC, they send all the documents for a thorough
legal scrutiny.
Validation Of Property
Prior to disbursement, the HFC also conducts a site visit to the customer's property to ensure that all construction norms have
been adhered to properly. Once the HFC is satisfied that the property is legally and technically clear, they disburse the loan
amount. The disbursement from the HFI is on the basis of the stage of construction of the property.
Payment Procedure
Once all the above mentioned process, the borrower is entitled to take the money from the lender party. Until such time that the
entire sanctioned amount is not drawn, the customer is supposed to pay a simple interest on the Actual Amount drawn (without
any principal repayments). The EMI payments commences only after the entire sanctioned loan amount is drawn.
The first step involved in applying for home loan is the procurement of application form from the HFC of your choice. The
Performa of application every HFC (Housing Finance Companies) is different from the other but about 80% information required to
be furnished is the same. Along with the application form necessary documents like address proof, age proof, proof of income,
bank balance etc. are also to be attached with the application form before it is submitted to the HFC. Along with all these
documents HFCs also ask for processing fee of the home loan that varies 0.25% to 0.50% of the total loan amount.
After successfully filling the application form and submitting it to the authority the next step is face to face with bank or HFC where
you have applied for the home loan. The bank first evaluates the papers submitted and summons the applicant for the personal
discussion regarding the home loan applied for. It is advisable that you carry all your original documents of whose copy you have
The next step is the field investigation done by the HFC or banks. They sent their representatives to the existing residence of the
applicants or their offices for the validation of the documents submitted. This is the essential part for the banks to establish the
This is the make or break stage of the process. The bank or HFC will establishes repayment capacity based on your income, age,
qualifications, experience, employer, nature of business etc. to access your credential. The bank can refuse your loan application
is any discrepancy is found at this stage. But if every thing goes according to the conditions negotiated by both the parties then
the bank or HFC sanction the loan that may be unconditional or with some conditions levied.
o Loan amount
o Rate of Interest
o Mode of repayment
If the terms and conditions are agreed the applicant has to sign the duplicate copy of the offer letter and that is to be submitted to
the Bank or HEC.
Step 10 : Disbursement
It is time for the final Disbursement of the Home Loan. After the bank or HFC ensures financing the property is involves no risk
they pay the final amount that is agreed upon. The mode of payment varies from full to part payment. In the case of under
construction property the mode is part payment and in the case of ready possession properties disbarment is full and final.
• Passport
• Photo PAN card
• Defence identity card
• Voter's identity card
• Driving licence
• Photo ration card
• Government identity card
Proof of residence (any one of the following)
• Passport
• Ration card
• Telephone (land/mobile) bill
• Electricity bill
• Driving licence
• Society outgoing bill
• Voter's identity card
• Life Insurance Policy
Only Passport can be used as both Proof of individual's identity and Proof of
residence.
• Passport
• Valid driving licence
• Voter's identity card
• Birth certificate
• School leaving certificate
• LIC Policy or Premium receipt clearly indicating the applicant's age
• Letter from the employer stating the age of the employee #
#
Applicable only for employees of select Public Limited Companies. Conditions
apply.
Financial documents
Salaried individuals
• Computation of income + P&L for the last 2 years certified by a C.A. OR P&L
and balance sheet for the last 2 years certified by a C.A. AND
• Copies of acknowledged IT returns for the last 2 years AND
• Bank statements for the last 6 months AND
• Partnership deed, letter of authority, Proof of office
• Computation of income + P&L for the last 2 years certified by a C.A. OR P&L
and Balance sheet for the last 2 years certified by a C.A. AND
• Copies of acknowledged IT returns for the last 2 years
• Bank statements for the last 6 months
• Memorandum and Articles of Association
• Board resolution
• Authority letter from all directors to accompany the application form with
photographs of authorized signatories if not specified in the board resolution
• Proof of office
The bank charges the interest on its home loan schemes at fixed rate rate of interest and the floating rate of interest on the following basis:
1. Floating interest rate - The floating interest rate is connected to State Bank Advance Rate and the amount of interest charged is
8% at floating rate.
2. Fixed interest rate – The rate of interest under fixed interest rate for the first year is 8% and 9.5% at a fixed rate for subsequent
period.
Federal Loans
Federal loans are usually the first type of loans that students think of. These are the Stafford Loans, Perkins
Loans, and PLUS loans. Each of these loans are subsidized by the government, but actually taken out through
financial institutions that are not related to the government.
Stafford and Perkins loans are the most commonly applied for loans for undergraduates. They are usually
considered to give applicants fairly low interest rates on student loans. The interest on student loans is set by the
government and is controlled by the current economy. The Stafford loan currently has a 6.9% interest rate, and
the Perkins loan is lower, at 5%. The Perkins loan is one of the types of graduate student loans that are out
there, but you must be able to show that you have significant financial need to qualify.
PLUS loans for students are designed for graduate students who cannot apply for any other type of financial aid
because they have used their options completely.
Private Loans
Private student loans are those offered by private institutions, such as a company or a school. Often students
who do not qualify for federal aid can get a loan through a private program. A common type of private loan is a
work study program for students, especially grad students. This gives the student a low interest rate on the loan
in return for working for the college, university, or company.
Since private loans are offered by many different institutions, it is hard to say what the interest rate is on each
loan. The best tip to finding a fair loan rate on a private loan is to advise you to shop around for the lowest
interest rate on private student loans that you qualify for. This is probably going to be the best loan for you!
Consolidation Loans
When students have too much education debt, they are often looking for a way to lower interest on student loans
and keep the same loan schedule. One option is to get a consolidation loan that has a low interest rate.
The consolidation loan will average the interest you are paying on all of your loans put
together. This lowers your overall interest rate. You can keep the same payback schedule, or you can receive
more time on your consolidation loan.
Repayment Options
One consideration you should make when shopping for the student loan for you is the repayment terms. Many
loans, such as the Perkins and the PLUS loans, let you wait until you are done with your education to start
making payments. This allows you to focus on your education while in school, and worry about repayment after
you have earned your degree. This is an excellent feature!
The Stafford loan has many different repayment schedules, ranging from a ten year repayment to a twenty-five
year repayment. Remember that the sooner you repay your loan, the less money in interest you will pay. If you
can do it, the quicker payback is better. Private and consolidation loans are going to vary in their repayment
periods, as they are offered by different companies and banks. Again, the sooner you can repay the loan, the less
it will end up costing you.
Once this is done, you will receive a Student Aid Report. This document summarizes your FAFSA results. At this
point, you can begin applying for aid. Remember to talk to your chosen school to find out about aid options you
might not realize you are eligible for. The financial aid department at your school is going to be your lifeline in
this process.
Finally, apply for the loans you are qualified for. Remember that there are several types of graduate student
loans and undergraduate student loans, so explore your options. Even if you think you might not qualify, it costs
nothing to apply, and with the many types of student loans, you just might find you do qualify for one
State Bank of India provides its customers with a variety of personal banking services. SBI, which is actively engaged in
Community Services Banking, also offers education loans to students aspiring to continue higher studies. SBI Study Loans are
sanctioned only to Indian Nationals. A study loan is sanctioned for studies both in India and abroad.
Courses Eligible for Education Loans:
A candidate, who applies for a program with prospects of employment, can apply for the loan. Whether you apply for a
graduate, professional or postgraduate program or any other course sanctioned by UGC, AICTE or the government, you will be
considered eligible for the loan.
An applicant is sanctioned a loan of maximum Rs 10 lacs for studying in India and Rs 20 lacs for studying in abroad. On a loan
above Rs 4 lacs, there is a margin of 5% and 15% for studying in India and abroad respectively.
The borrower can begin repaying 6 months after getting job or one year after the course is completed, whichever happens
earlier. The loan can be repaid in a period of 5 to 7 years.
EDUCATION LOAN
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A term loan granted to Indian Nationals for pursuing higher education in India or
abroad where admission has been secured.
Eligible Courses
Any other expenses required to complete the course like study tours, project work
etc.
Amount of Loan
Interest Rates
w.e.f. 29.06.2009 (SBAR 11.75%)
Repayment Tenure
Repayment will commence one year after completion of course or 6 months after
securing a job, whichever is earlier.
Repayment Period
Place of Study Loan Amount
in Years
Studies in India Rs. 10.0 lacs 5-7
Studies Abroad Rs. 20.0 lacs 5-7
Documentation Required
Eligibility:
For school/graduate education in India or abroad:
Minimum second division (pass marks for SC/ST)
For technical/professional/specialized /post graduate studies in India or abroad:
Securing admission.
Parents/guardians having independent source of income
Purpose:
You can take a loan for pursuing studies in recognized schools/colleges/ institutions to meet:
* Tuition and other fees
* Maintenance costs, books & equipments, etc.
* Cost of passage (for studies abroad)
Loans available even for correspondence and part time courses and normally given to student
and parent/guardian jointly.
Loan Amount:
* For school/graduate education in India or abroad:
A maximum of 6 times the monthly net income of the parent/guardian, subject to a cap of Rs. 1
lac
* For technical/professional/specialized/post graduate studies in India or abroad:
90% of the cost of the study, subject to a maximum of Rs. 5.0 lacs for studies in India and Rs.
10.00
lacs for studies abroad
Interest:
Loans up to Rs 2 lacs 12% and loans over Rs 2 lacs 14% per annum.
Securities:
Some security acceptable to the Bank would be required.
Repayment of Loan:
I. For school/graduate education in India or abroad: Loan may be conveniently repaid in 36
monthly installments by the parent/guardian
II. For technical/professional/specialized/post graduate studies in India or abroad:
Conveniently repay in a maximum period of 60 months after completion of course or securing a
job, whichever is earlier. A nominal amount of 0.5% of the loan only need be paid per month
towards part payment of interest
Eligibility:
The educational loan facility offered by SBT is open to NRIs under the scheme ‘SBT NRI
Educational Loan’. It is available to students with good academic record who are interested in
pursuing higher education in India or abroad. The courses covered under the scheme cover
almost every level and field of education.
Repayment Terms:
The loan for school/college education is repayable in 36 installments and commences one month
after the disbursal of the loan. Loan taken for professional course is repayable in 60 installments
and commences a year after the completion of course or immediately after securing a job
whichever is earlier.