Home Loan FAQs, Questions Related to Home Loan

Do you have questions regarding home loans? The home loan FAQs discussed in this article will answer all your questions and help you learn.

1. What are the many types of mortgage loans offered by banks, and which would be the best fit for you?

Most banks provide a variety of mortgages for house purchases, including loans for land, building loans, completed homes, properties suitable for immediate occupancy, loans for non-resident aliens, etc.

To select a suitable home loan programme, you need to have a firm grasp of how it works. Check whether you need a home loan to buy a new house or a loan to refurbish your existing one.

2. What factors are considered while granting a home loan?

The banks check your monthly income, the availability of a co-borrower, the price of the property, the downpayment you will pay and other factors to understand whether you can repay the mortgage instalments on time without hassle.

3. What role does my CIBIL (credit) score have in determining the interest rate I am offered?

If you want a mortgage in the amount of your choice at a reasonable interest rate, a credit score of 750 or more is ideal. This means it’s crucial to talk to a lender about the mortgage interest rate you may get based on your credit score.

Let’s say you have a steady job and a monthly salary of more than Rs 1 lakh. You plan to apply for a home loan of Rs 4 crore and have a credit score of 680. The bank may charge you 12% interest. The same bank may charge a different interest rate to another person with a slightly higher monthly income and a credit score of 750 and above.

4. Have a fixed or adjustable interest rate on your mortgage loan?

A slight shift in interest rates may significantly affect borrowing money and the cost of keeping up with payments. Find out if the interest rate on your home loan will be fixed or variable and if the APR will be constant or variable. 

Choices in mortgage interest rates include:

• A home loan with a fixed interest rate means your monthly payment will never change.
• Interest on mortgages with both fixed and variable rates is often fixed at the outset and then goes variable.
• Save up for other priorities and check out the interest rates given by several banks before applying for a house loan.

5. Which loan term best suits your needs?

Lenders often provide payback periods from one to 30 years. An adjustable-rate mortgage’s term length can be adjusted according to the borrower’s age, income, and other factors. Your home loan’s monthly payments (EMIs) will vary depending on the term you choose, so it’s a good idea to find out from your lender what options you have.

The EMIs are lower for a longer-term loan and higher for a shorter-term loan. An EMI calculator inputs data about a loan, such as the principal, interest rate, and payment schedule, into a mathematical formula. Every single loan has the same interest rate and payment schedule.

6. How much does it cost to execute a home mortgage application?

Depending on the financial institution, the processing fee could be anywhere from 0.50% to 2.50% of the total loan amount. The mortgage application processing fee is often relatively small, but it might add up if you need more preparation. It would help if you inquired with your lender about the mortgage processing fee.

7. Mortgage prepayment penalties

You can pay off your mortgage balance in full if you get a raise, your company does well, or your financial situation improves in another way. Most financial institutions will assess a small prepayment fee if you close your home loan account before the term is up. Know the prepayment fee amount before you decide to foreclose on your loan. A mortgage might need to be more on its own, and other forms of financing might be necessary.

Many lending institutions, including banks, will insist that you have homeowners or life insurance before disbursing your home loan funds. Having no choice but to pay off your mortgage when the time comes is a sobering reality. Find out if your mortgage loan requires this coverage and how much the premium will be by talking to your lender.

8. Can two people each apply for a mortgage?

You can apply for a mortgage with a co-applicant if you cannot meet the requirements alone. Consult your bank or other financial institution about the possibility of submitting a home loan application with a co-applicant to increase your chances of approval.

9. Can the bank reject my mortgage paperwork?

You must confirm with the lender the comprehensive paperwork they expect to see to process your loan application. The lender may reject your application if you apply for a home loan but provide false or insufficient documentation. You must double-check your mortgage paperwork before sending it to the lender.

10. If you apply for a mortgage, what extra services can you expect from the bank?

The market for home loans is more competitive than ever due to the influx of new banks and NBFCs. The extra money you save by taking advantage of these perks is yours to spend as you see fit. Being aware of these advantages will help you plan.

Suppose you have more concerns or questions about the home loan application process. In that case, you may inquire whether a specialised home loan representative will be available to assist you. Save the email and phone number of your mortgage lender’s customer service department in a safe place, and consult more on Piramal Housing Finance’s website.