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Other than helping one make homes affordable for the common people, home loans also come with a host of tax benefits and allow borrowers to save a substantial amount of money each month by way of tax benefits.
Here’s How to Apply for Online Home Loan in India
While it is possible to apply for a loan in person, when it comes to home loans, most people prefer to take the online route as it saves them both time and effort. If you are planning to apply for an online home loan, the process will involve the following steps.
– The first step in the process is applying for a home loan. All lenders host online forms. All an applicant has to do is access the form and apply for a loan. However, before beginning the online application process, applicants must do their research and talk to as many lenders as they can, negotiate with each lender for a good loan term and deal and go with the lender offering the best interest rates and other loan terms, such as repayment tenor and loan sanction, etc.
– After you have filled the form, submit it. During this step, you will be required to pay a one-time home loan processing fee which is non-refundable.
-Once you have paid the processing fee, your bank will take a call on your application. If they think you are a reliable borrower and can be trusted with timely repayment of loan money, they will extend you a loan offer and ask you to submit the relevant documents. One can find the list of all the required documents on their lender’s website. It is best to go through this list in advance and keep all the documents ready to experience a hassle-free loan application process.
– After you have submitted all the required documents, your lender will verify all the documents. After the verification process is complete, they will extend you a loan offer or a loan sanction letter. This letter will contain details of the loan terms and conditions you are being offered, such as the loan amount you have been sanctioned, the rate of interest being offered to you, etc. If you are happy with the loan offer, go ahead and sign it. If not, renegotiate with your lender.
– If you accept the loan sanction letter, your lender will go ahead with the legal and technical verification of the property as well as the property papers.
– If your lender is fully satisfied after this step, they will release the final loan agreement. While every other step of the process can be conducted online, you will have to go to the branch office to sign the final loan agreement.
– After you have signed the final loan agreement, your lender will disburse the loan amount into your account.
Now that we have a clear understanding of the home loan process, let us get to the home loan processing fee and other fees and charges.
What is the Home Loan Processing Fee and What Are the Other Fees and Charges Involved in the Home Loan Application Process?
All lenders charge a home loan processing fee. They use this fee to cover up the cost associated with home loan processing, such as the cost of carrying out legal and technical verification of the property, etc. The home loan processing fee varies from lender to lender but is charged as a percentage of the total loan amount. In general, lenders charge 1% of the loan amount as the home loan processing fee.
Let us look at the other fees and charges associated with home loans.
Insurance Fee
Life is unpredictable and anything can happen at any time. Therefore, it is best to secure your home loan with insurance. Depending on the type of home loan insurance you have chosen, your home’s wear and tear as well as a certain number of EMIs will be covered in case your home undergoes any damages or you lose your job, respectively.
Conversion Fee
This is a fee that borrowers are required to pay when they wish to reissue their loan. Let us suppose a borrower is repaying a loan at 8% interest rate. They are on fixed interest rates and the rate of interest goes down. In this case, the borrower can request their lender to reissue their loan at the lower interest rate prevalent in the market. Their lender will do so but they will charge a fee and this fee is known as the home loan conversion fee.
Prepayment Charges
Most lenders want to become debt-free as soon as possible. Thus, they use the money from bonuses, FD maturity and other payouts to prepay their loan. As per the latest RBI guidelines, borrowers on a floating rate of interest can prepay their loan at any given time without paying any prepayment fee. However, borrowers on a floating rate of interest must pay a prepayment penalty for closing their loan earlier than anticipated. Borrowers must check the prepayment charges before signing on the dotted line.
Final Words
A home loan is a big-ticket and long-term expense. Therefore, borrowers must avail of these loans after proper planning. They must also read the loan agreement properly and sign it only after they are fully satisfied with the home loan interest rates offered as well as the fees and charges applicable. They must also understand the tax benefits on home loans and make sure they are availing of these benefits and saving money. Lastly, they must mandatorily use the home loan calculator to work out the loan amount they qualify for and apply for this amount only to ensure quick approval and beneficial loan terms and conditions.
