borrower's guide to home loan

Everyone dreams to have a house of their own. But the surging prices of real estate are making this dream far fetched for a person belonging to middle income group. One can opt for a home loan and live in the house they always wanted to, without having to pay the entire money at once.


What is Home Loan ?

What is Home Loan?

A home loan is a taken to buy a ready-to-move-in house or a house that is under construction. It can be availed from any bank, private or public, or any other money lending organization at a certain interest rate. Like you can get a home loan from HDFC, SBI, Canara Bank, Bajaj Finserv, etc. Home Loan is a type of secured loan in which usually, the concerned property is taken as a security by the lender. Home loan repayments are done through EMI or equated monthly installments which is fixed based on the interest rates.

Eligibility for Home Loan

Multiple factors play a crucial role in determining one’s eligibility to get a home loan sanctioned. These factors are mainly considered by the home loan provider to ensure that the borrower is capable of repaying the loan. The factors that affect eligibility for home loan generally are –

  • Financial Stability: Having a stable source of income is the basic criterion of availing a home loan.
  • Age of Applicant : The lesser the age of the applicant, the higher are the chances of getting a home loan for a longer tenure.
  • Less Financial Obligation : Having a debt to pay may reduce your eligibility for a high home loan amount.
  • Credit score : A CIBIL Score of 650 and above is generally considered for home loan.

Eligibility Criteria for getting a home loan from HDFC

HDFC bank is a global bank and is a trusted name. It has its headquarters in Mumbai, Maharashtra. The following criteria determine one’s eligibility of availing home loan from HDFC :

  • Age of Applicant : Between 24-60 years for salaried individuals and between 24-65 years for self employed individuals.
  • Minimum Work Experience : At least 2 years for salaried and 4 years for self employed.
  • Credit Score : CIBIL score requirement in case of HDFC is quite high, around 750.

Eligibility Criteria for getting a home loan from SBI

  • Age of Applicant : SBI offers home loan to someone as young as an 18 year old in case of salaried applicant. The minimum age for self employed applicant is 21 years. The upper age limit for both is 70 years.
  • Minimum Work Experience : At least 2 years for salaried and 3 years for self employed.
  • Minimum Annual Income : For salaried the minimum annual salary should be Rs. 1,20,000 p.a and for a self employed person the annual turnover should be more than or equal to Rs. 2,00,000.

Eligibility Criteria for getting a home loan from Kotak Mahindra

  • Age of Applicant : The minimum age limit is 21 years for both salaried and self employed individuals. The maximum age is for salaried and self employed is 60 and 65 years respectively. 
  • Minimum Work Experience : At least 2 years for salaried and 3 years for self employed.
  • Minimum Annual Income : Minimum salary/ turnover of Rs. 4,80,000 is required for salaried/self employed applicants.

Documents Required for Home Loan Application

Proof of
Aadhar Card / Voter’s ID Card / Passport / PAN Card / Driving License
Proof of
Ration Card / Passport / Any Utility Bill like Electricity Bill, Gas Bill
Proof of
1. Salary slips ( for salaried)
2. Income Tax Returns File
3. Bank statement of last 6 months
4. Balance Sheet ( for self employed) validated by the CA/CS
5. Form number 26 (for self employed)


Can an applicant get 100% of the Property value as Home Loan?

Neither Banks nor money lending institution grant 100% of the property value as home
loan. Banks lend up to 90 per cent of the total value of the property. The rest has to be paid as down payment. For example, if a property is worth 30 Lacs and the bank is providing 90 percent of this value as home loan, then the home loan amount will be 27 Lacs, the remaining 3 Lacs has to be paid by borrower in order to purchase the house.

Can an applicant apply for Home Loan from Two Places for the Same property?

No,one cannot avail the two home loans for the same property at the same time. This act has been restricted as per the rulings of Central Registry of Securitisation Asset Reconstruction and Security Interest of India, CERSAI.
However, one can opt for home loan balance transfer for EMI benefits, lower interest rate, top up loan, etc.

How long it takes to get a home loan sanctioned?

It usually 21 days to a month’s time to get a home loan sanctioned. However, for a quick sanction of home loan the applicant must keep in mind the following :

  • Get a pre-approval of your home loan from the concerned lender.
  • Have all income related documents ready and up to date
  • Have the property documents ready.

Preapproval of Home Loan:

Prior to the selection of the property you want to buy, you should consider getting a pre-approval of your home loan from the concerned lender.

A pre-approved home loan is an offer for a loan based on your repayment capacity. The loan officer looks into your income, debt, assets, and credit history and decides how much you can borrow.

A pre-approved loan is generally valid to a period of 6 months.

However, pre-approval doesn’t always mean that your loan will be disbursed immediately and depends on certain external as well internal factors. For instance, your loan sanction can be delayed if there’s delay in submission of property or income-related documents.

In a pre-approved loan, the final loan terms are worked out at the time of

Who has Ownership of the House?

Since the loan provider takes the concerned property as a security, they have the ownership of it till the time you repay the loan. Only after repayment of the entire loan amount along with interest, you will get the ownership of the property. The lender has all the rights to sell the property as loan recovery in case you fail to repay your dues.

When does the EMI Start ?

You have to start paying your Equated Monthly Installments after receiving the loan amount, when the disbursement cheque has been created. The EMIs need to be paid in a certain cycle. Supposedly you have chosen to pay the EMI on the 7th of every month, and you receive the loan amount on 27th of a month, then you pay the for 1st month’s emi calculated from the day your home loan was sanctioned . From next month onwards, the EMI continues on the designated day that was selected.


How to get the Best Out of your Home Loan?

  • Make interim prepayments as and when possible on your end for the long term home loan as it will save a lot of interest.
  • Opt for a joint home loan with your wife this will help you get a lower interest rate.
  • Make use of Government home loan subsidy schemes like PMAY.

Is Opting for a Home Loan Worth It ?

One may think that opting for a home loan seems very lucrative but the hefty interest on the loan for the long tenure like 15 years might not be worth it. However, this notion is far from reality. When you are buying a property for your
residential needs, the amount of interest you pay is nothing compared to the increase in price of your property in these 15 years.

Opting for home loan to buy the house of your dream is a wise decision because :

  • You don’t have to wait to save a huge corpus to buy a property
  • Long tenure for repayment results in easy EMIs, thus making the loan repayment feasible.
  • You can at any time opt for home loan balance transfer for better interest rates or a top up loan for renovation.
  • Availability of home loan subsidy schemes from the Government of India, like PMAY – housing for All Scheme, makes home loan more affordable.