About Loans

Home loans are an impetus to the housing aspirations of millions across the country. With rising expenses and economic commitments, the loans provide a much needed respite from paying colossal lump sums in one go. Here are some queries surrounding home loans.

How much can a person borrow?

Loans are generally disbursed between 70%-80% of the cost of the flat. The balance money is to be funded by the flat purchaser from his own contribution. The percentage of loan may vary from bank to bank.

What is an EMI?

Equated Monthly Installment (EMI) is the amount comprising a portion of the interest and the principal loan amount, which is payable by a borrower to the lender every month.

How is the rate of interest calculated in India?

Interest rates vary from time to time and from institution to institution. The interest is calculated either on a daily or monthly reducing or yearly reducing balances.

What is a floating interest rate housing loan?

A floating interest rate loan is a loan where the interest rate payable is linked to the bank's Internal Prime Lending Rate (PLR) such as the base rate which rises and falls as per bank’s policy.

What are the repayment period options?

Repayment period options range generally from 5 to 20 years. Some of the banks may give loans up to 25-30 years also.

What are the charges for availing a housing loan?

• Processing Fees are payable to the lender on applying for a loan and can either be a fixed amount not linked to the loan or may be a percentage of the loan amount.




• Prepayment Penalty between 1% and 2% of the amount being prepaid is charged by some institutions when a loan is paid back before the end of the agreed duration. Many banks now do not levy penalty on partial prepayment.




• Franking Charges as per prevailing rate of Government Authority

What security is required for a housing loan?

The flat purchased is the primary security and is mortgaged to the lending institution till the entire loan is repaid. Additional security such as life insurance policies, shares, bonds, fixed deposit receipts, national savings certificates can also be offered, as per the requirements of the institution.

What is the time required for approval of a loan application?

Varies from bank to bank but usually it is 15 - 20 days for a salaried person and 20 - 30 days for a self-employed person depending on the applicant's documents.