Home Loan

There is nothing like a free lunch in this world. Therefore, you should be ready to pay the processing fees for your housing loan. Is this the only charge you will incur? It depends from bank to bank. Some banks charge less processing fees, but may make up for that somewhere else. On the other hand, some banks and financial institutions consolidate their charges and include them in the processing fees. Let us look at some common charges you will most likely incur when you apply for a home loan.

1. Upfront fee for processing –Many banks charge an upfront fee for processing your application. This is usually in the range of 3000 to 5000. This is a non-refundable fee, even in case the bank rejects your loan application. In case they sanction your loan, they adjust this fee in their regular processing fees.
2. Processing fee –This amount ranges from 0.25% to a maximum of 2% depending on your employment status. Salaried employees incur a smaller fee whereas self-employed professionals and business persons have to pay more. Some banks do have a uniform rate. Note that you have to pay GST @ 18% on this processing fee.
3. Valuation charges –Many banks charge for the valuation of the property. They have independent evaluators on their panel. These banks have a fixed structure of payment. Some banks insist that the customer pays to the bank whereas some of them include this amount in their processing fee structure.
4. Legal scrutiny charges –Legal scrutiny of the property is mandatory. The financing bank has to ensure that you get a clear title to the property so that the mortgage holds well in law. Therefore, they have a panel of legal experts who carry out the search for a period of 30 years. You need to supply the property documents to these advocates to allow them to do the needful. Some banks ask the customer to pay the advocates separately whereas many banks include these charges in their processing fees.
5. Mortgage registration charges –The prime security for the home loan is an equitable Most of the states in India require you to register the equitable mortgage in the bank’s favour. Under such circumstances, you incur stamp duty and registration charges. The equitable mortgage does not attract stamp duty in some states like Rajasthan. However, in states like Tamil Nadu, there is a stamp duty of 1% of the loan amount subject to a maximum of 25,000. In addition, you have to pay 5,100 as registration charges. Be aware of these additional expenses when you avail Home Loan.
6. Pre-EMI charges –Some banks have the system of charging pre-EMI charges. Ascertain these charges beforehand.
7. Insurance –Taking out insurance for the property is mandatory. At the same time, many banks and financing companies bunch a lot of their products like loan insurance, Mediclaim family floater policies, accident insurance, and critical illness cover, etc along with the loan. They provide the financing for the premium as well. Of course, you have to repay the same in your EMI. In a way, it is good to have these insurance policies because life is uncertain. In case something happens to the breadwinner and the principal borrower, the insurance can take care of the liability. However, other than the property insurance, all the other policies are optional. You can refuse to take them.

1. On completion of this process, you will be able to choose the offer that suits your requirements. You should keep your documents and the application forms ready. Uplaxya Consultants Pvt. Ltd. has a special team to assist you in this regard at no extra cost.

2. The lender has the responsibility of verifying the KYC and income proof documents. The lender would like to inspect the property and have a discussion with the borrower to obtain first-hand information about the borrower’s employment, business, income, and investments.

3. Banks have advocates on their panel to carry out a legal search for the last 30 years to ensure the property is free from any encumbrances and that the borrower has the clear title to it. It is a pre-requisite for the equitable mortgage to be valid and binding on the borrower.

4. The evaluation of the property is the next step following which the banks appraise the loan application for the eligibility amount.

5. On the approval of the loan, the bank sends you the sanction letter that you have to go through and agree to the terms and conditions. Uplaxya Consultants Pvt. Ltd. helps you in this regard.

7. We help you with the disbursement process as well.

1. Purchase of a flat in an apartment complex – Banks finance their customers to buy flats in residential complexes. Here you have the concept of an Undivided Share (UDS) in the land.
2. Purchase of individual house –This is similar to the type of Home Loan described above however there is no concept of ownership of UDS. The entire land belongs to the borrower. Naturally, such houses have a better resale value.
3. Purchase of Land/Plot –Banks finance their customers for the purchase of vacant plot or land for subsequent construction of house. Usually, banks stipulate that the construction of the house should begin within one year of purchase of land for the loan to be treated as a Home Loan.
4. Construction of a house on own land/land purchased out of bank finance –You can avail a loan for constructing your house on your land. Banks have their methods of determining the cost of construction. Naturally, you need to obtain the requisite permission from the local municipal authorities for constructing your house on the land. You need to have an approved plan as well.
5. Home improvement/extension –You can approach a bank for financing home improvement or for extending the house. In the latter case, you need to have the requisite approvals and plans in place.
6. Balance Transfer –This facility allows you to switch over your Home Loan from one bank to the other. If you have a high-interest Home Loan, availing this facility can be useful. You could transfer your outstanding loan amount to another lender at low interest rate, thus saving on interest cost.

After completing the above process, you can zero in on the loan provider. Keep all your documentation along with the application form ready and the Uplaxya Consultants Pvt. Ltd. (UCPL) team will contact you and assist you in the application process. This service comes at no cost to you!

The lender will verify all your documents. The next step is the valuation and legal scrutiny. Banks have their panel of evaluators and advocates to do this for them.

A personal discussion between the lender and the borrower is the next step on the agenda. The lender usually meets the borrower at their residence to get first-hand information about the borrower’s income, property, investments, and also the source of funds to meet the margin requirements. This is a sort of a pre-sanction inspection carried out by the bank.

Once the verification and processing are over, banks provide you with a loan offer letter which contains the terms and conditions of the sanction. In case you choose to accept them, you need to sign one copy and deliver it to them followed by execution of the home loan documents. Uplaxya Consultants Pvt. Ltd. (UCPL) plays a big role in this regard and our experts will assist you every step of the way.

Most banks lend as per the under-mentioned grid, provided the borrower can demonstrate the ability to repay the loan amount.

You can apply for a Home Loan even before you begin the search for a property. The bank will look at your income details and give you a pre-sanction on the basis of your income eligibility. This will give you the confidence to decide on the budget that you have for your property buying decision. The final loan amount will, of course, be determined once you provide the property cost and other details to the bank. They will fund a specific percentage of the property cost, subject to your income eligibility and the balance will be your margin requirement. Also, refer to the section on – ‘How much of the property cost will the bank finance?’

• Identify the property you intend to purchase
• Determine your Loan Eligibility – This differs from lender to lender and depends on various factors like your age, income, profile, past credit performance etc. Just contact mymoneymantra and our Home Loan Specialist will help you check your eligibility across lenders. We will also help you get the best deal.
• Apply for the Loan with the lender of your choice by filling the application form of the lender and providing all requisite documents. Our team will meet you at your convenience and help you in choosing the lender best suited for your requirements, completing all documentation requirements and getting your application logged in with the lender. All this comes at NO COST to you as our partner banks pay us for our efforts in this regard.
• Verification/Credit Appraisal Process – The lender will verify the information and documentation provided along with checking your credit history. The lender can also ask for additional documents during the loan appraisal process.
• Legal Document Checking – The lender will do a title search of the property to ensure that the current ownership is valid. This is done either through an in-house legal department or an external legal firm.
• Property Valuation – The lender also gets an in-house or independent valuation for the property to determine the loan amount. For large loans, some lenders get 2 valuations done for the same property and could determine the loan amount basis the lower valuation. The valuer will also check if the building meets the approved building norms. The upkeep of the property is an important factor considered by the valuer and lender. Similarly, the future expected life of the building should ideally exceed the tenure of the loan sanctioned.
• Personal Discussion – The lender will normally meet or speak to the borrower during the loan appraisal process. Some of the aspects that come up during such discussions are :
  1. Details of the property transaction
  2. Income details
  3. Business / job aspects
  4. Other investments, savings, repayment capability
  5. Source of own funds for the property purchase
• Loan Offer letter – Post verification and credit appraisal process, the lender sends an offer letter with details like loan amount, tenure, rate of interest and other terms and conditions.
• Accept the terms and conditions of the Sanction Letter before proceeding to the next step.
• Sign the Loan Agreement and provide repayment instructions.
• Disbursal of Loan – Our Mortgage specialist will assist you all the way. No need to worry, as we are just a phone call away at all times. We will be happy to hear from you even after the loan has been disbursed, if you would like to get any help or clarification regarding your loan.