Applying for a Home Loan? These are the Documents You Will Need!

Availing Home Loans can prove to be a very tedious process, but Fincity’s team of financial experts are not only highly skilled but also committed to taking away the hassle and simplifying the task.

If you’re on the exciting journey to owning a house, let’s make it easier for you! Here are a few documents you’ll need for a home loan. 

Home Loan Documents Required for Salaried Employee: 

Particulars Documents 
Application form: Completely filled and signed Home Loan application form of the chosen bank/financial institute. Compare and choose from best offers here. 
Identity/ Age Proof: PAN Card (mandatory) Driving License Passport 
Address Proof: Passport Rental Agreement Driving license Electricity / Telephone Bill  Ration Card  Bank Statement  
Income Documents: Last 3 months’ salary slips Last 6 months’ bank statement (Salary Account)Form 16   
Property Documents: Copy of complete chain documents of property Copy of Agreement to Sell (if in possession) Copy of the Allotment Letter / Buyer Agreement(if applicable) Copy of Receipt/(s) of payment/(s) made to the developer (if applicable) 

Know More About Home Loan For Salaried

Home Loan Documents Required for Self-Employed Individuals (Professionals and Non-professionals: 

Particulars Documents 
Application form: Completely filled and signed Home Loan application form of the chosen bank/financial institute. Compare and choose from best offers here. 
Identity/ Age Proof: PAN Card (mandatory) Driving License Passport 
Address Proof: Passport Rental Agreement  Driving license  Electricity / Telephone Bill   Ration Card   Bank Statement  
Business Establishment/Existence Proof:   Business Profile Establishment Certificate  Trade License Certificate  SSI Registration Certificate Partnership Deed (for firms) / Memorandum of Association (MOA) for companies  Export-Import Code Certificate/Factory Registration Certificate  PAN Card/Sales Tax/ VAT Registration Certificate  SEBI Registration Certificate  Registration No issued by ROC   Degree Certificate for Professionals  Membership Certificates for Professional Business Existence Proof for Professionals  
Income Documents: Income Tax Returns certificate for 3 years along with COI & B/S duly certified / audited by CA   Last 12 months’ Bank Statements (Self & Business) 
Property Documents: Copy of complete chain documents of property  Copy of Agreement to Sell (if in possession)  Copy of the Allotment Letter / Buyer Agreement (if applicable)  Copy of Receipt/(s) of payment/(s) made to the developer (if applicable) 

Know More About Home Loan for Self-Employed

Need more specific queries about home loan documents? Connect with our expert loan advisors at hl@fincity.com.

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Finance Minister Announces Income Tax Relief for Home Buyers and Real Estate Developers

On 12th November, as part of Atmanirbhar 3.0 stimulus geared towards economic growth, Finance Minister Nirmala Sitharaman has announced additional income tax relief for home buyers and real estate developers. This is expected to encourage individuals with the monetary capacity to invest in real estate and for developers to clear existing inventory and obtain liquidity for future projects.

As per the government ruling under Section 43(CA) of the IT Act, for primary sale of residential units costing up to Rs.2 crores, home buyers will now get an income tax relief of up to 20% till June 30th, 2021. “This will incentivize people to buy homes and bring down the excess inventory,” stated Nirmala Sitharaman. Buyers of such units will get a tax benefit of up to 20% under Section 56(2)(x) of IT Act, 1961.

The differential between circle rate (stamp duty value) and agreement value (purchase value) for a residential unit costing up to Rs.2 crores has now been doubled to 20% from 10%. This is the second time this differential value has been revised this year; the first announcement came in February when this differential was increased to 10% from 5%.

In an instance where the circle rate is Rs.1.5 crores, the cost of the house can go up to Rs.1.8 crores to keep within the 20% differential. With the earlier 10% differential rule, this would’ve limited your purchase budget to Rs.1.6 crores. Also, as a boon to realtors, bank guarantees that earlier cost 10-15% of the project value will now stand at just 3% of the total project cost.

Facts You Must Know Before Signing as a Loan Guarantor!

Well-known banks and non-banking finance companies affiliated with Fincity offer loans to people from every walk of life, most however belonging to the middle-income category. In some cases, however, the lender requires that a guarantor be added to the documents. Till the 90s, lenders made it almost mandatory to add a guarantor, but these days a lender may ask for a guarantor only in case of borrowers with a high-risk profile. Adding a guarantor in such a situation makes it more comfortable for the lender to disburse the loan amount.

When do you need a home loan guarantor? 

A home loan lender may ask you to list a guarantor if: 

i) the amount you want to borrow exceeds the limit generally sanctioned.   

ii) you lack financial strength. 

iii) you are aged and nearing retirement or have a high-risk job. 

iv) you are self-employed with no consistent income or if your salary is lower than the predetermined minimum income. 

v) If your credit history/score is poor and riddled with debt repayment defaults.  

Who is eligible to be a guarantor? 

A person can sign up as a loan guarantor if they’re: 

i)  over 18 years of age. 

ii) a citizen of the country. 

iii) if their income is high enough to settle the loan (with interest) in case the borrower is unable to make the payment or if the borrower doesn’t have the loan covered by a protection insurance and expires before paying off the entire loan amount.

It’s important to note that when you sign up as a loan guarantor, you limit your borrowing capacity and legally hold responsibility to repay the loan if the borrower defaults. Now, the borrower can choose to be their own guarantor if they own another property they can pledge but lenders generally prefer a third-party guarantor.

Let’s highlight a few facts you should be aware of before enlisting as a loan guarantor.

  1. You are contractually bound until complete loan repayment 

As a loan guarantor, you are legally obligated to clear the loan along with interest and other dues created by the primary borrow, in case they are unable to. The court will take legal action against a “willful defaulter” and their guarantors.  

  1. Court may attach your assets to foreclose loan 

In case the borrower defaults and the guarantor is also not able to pay up, the court can attach the guarantor’s assets to cover the loan amount and losses incurred by the lender. 

  1. Financial guarantor vs Non-financial guarantor 

A financial company may ask for either type of guarantor. A non-financial guarantor is required for simple purposes like contacting the primary borrower in case they’re unreachable. But in the case of a financial guarantor, their financial documents are evaluated, and are financially liable to repay the borrower’s debts in case they default.

  1. Your loan eligibility is impacted

As discussed before, the law holds the guarantor as legally accountable for the loan as the primary borrower. Unfortunately, this affects the loan eligibility of the guarantor, meaning – if the borrower has taken a Rs. 50 lakh home loan, the guarantor’s eligibility reduces by Rs. 50 lakhs. Not just that, any default or other negative repayment pattern by the borrower has a direct impact on the guarantor’s credit score. Check how much loan you are eligible for with Fincity’s loan eligibility calculator.

  1. You are obligated till the loan tenure ends 

It’s important to remember that the guarantor is liable for the loan till the loan tenure is over. In case a loan is foreclosed before time, the guarantor should seek an NOC from the lender and also ensure that the lender notifies the credit scoring companies about the release of guarantorship. This will allow the guarantor to get a higher loan amount sanctioned for themselves.

Hope this helps you understand your role before you guarantee a friend’s or relative’s loan debt repayment.

More questions? Connect with a Loan Expert!

How to Improve Your Credit Score?

A Credit Score is calculated by credit agencies/bureaus; the four RBI-licensed ones in India are TransUnion CIBIL (Credit Information Bureau India Limited), Experian, CRIF High Mark and Equifax. Banks and financial companies consider this score along with other factors such as your income and age to evaluate your eligibility for a financial product like a loan or credit card.  

It’s a 3-digit number that lies in the range of 300 to 900, and is essentially a numerical representation of your ability to repay the credit being borrowed on time. The higher the score, the better the chances of you securing a loan at a better interest rate. Here’s everything you need to know about what’s a good credit score. {link to How Important is a Credit Card for Home Loans} 
 

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The Score Calculation

Credit agencies primarily take into consideration factors such as your credit history, credit mix/type, credit usage ratio and other factors. Here’s a breakdown of the weightage given to each factor: 

Factor Weightage 
Credit History 30% 
Credit Type/Mix 25% 
Credit Usage Ratio 25% 
Other 20% 

Read more on How a Credit Score is Calculated! 

Advantages of Having a High Credit Score 

Some notable benefits that you enjoy when you have a good credit score are: 

  • Loans at Lower Interest Rates  
  • Lower Loan Processing Fee & Charges 
  • Quick Approval of Credit (credit card and loans) 
  • Higher Credit Limit 
  • Access to Best Deals & Offers 

Steps to Improve Your Credit Score 

As stated earlier, a good credit score does not guarantee that a lender will approve your loan since there are a number of other factors a bank/financial company will consider besides your credit score but it does improve your chances significantly. Let’s quickly look at a few steps you can take to ensure a better score. 

  1. Paying Credit Dues on Time: Remember how credit history carries 30% weightage in calculating your credit score? That makes paying your loan EMIs and credit card bills on time very important. In case you have multiple debts, make it a point to set up alerts or reminders to avoid a delay or missed payment. When you default or delay payment, the credit agency perceives you as being inconsistent with repayment. 

Note: According to a report by Financial Express, a 30-day delinquency can reduce your credit score by 100 points.

  1. Clear Off Outstanding Dues: Unpaid debts reflect on your Credit Report and affect your score negatively. So make sure to clear off all outstanding dues even if they aren’t of a huge amount. 
  1. Credit History and Duration: If it’s been a long time since you opened a credit account meaning you have a number of years in credit history, it allows agencies to understand your credit behaviour more effectively. It is advisable to start building a strong credit history early on to help build a good credit transaction record.  
  1. Avoid Sending Multiple Applications: To avoid looking credit hungry, it’s better to not send multiple applications for credit. When you apply for a loan/credit card, the lender places a “hard inquiry” for your credit report. Multiple hard inquiries are reported and will affect your credit score adversely. Find out your loan eligibility in a click!  

Note: In case your application has been recently rejected, try to wait a while and improve your score before you send out another application. 

  1. Pay Monthly Dues in Full: A lot of times when money is tight people choose to pay off only a small amount of the outstanding principal known as the minimum amount due. This in turn increases your debt with the interest compounding on your outstanding balance. To credit bureaus, this will show poor repayment behaviour and therefore it’s advisable to pay your dues fully. 
  1. Have a Credit Type Mix: Try to maintain a mix of secured and unsecured loans; secured loans such as home loans and auto loans are backed with a collateral while unsecured loans such as a credit card or personal loan do not come with a security. It’s important to note that any default in repayment of these loans will affect your score negatively. While a higher composition of unsecured loans is not favourable, secured loans repaid on time actually has a positive influence on your score. 

Note: If you’ve used a Credit card for a number of years, avoid losing its credit history by closing the account.   

  1.  Maintain Low Credit Utilization: Your credit utilization is the portion of the credit limit you have utilized, and its ratio is calculated by dividing credit balance by credit limit and then multiplying by 100. Fincity advisors recommend that you try to not exceed using 30% of your credit limit. Using over 50% of your credit limit can have a bad impact on the score and indicate to lenders a high risk of defaulting. 

If you have more concerns about your credit score or want a more detailed account of how lenders calculate your eligibility, feel free to connect with a Fincity advisor at hl@fincity.com and have all your doubts cleared! Our experts can even help you get the best home loan deals at the lowest interest rates. 

Check Your FREE Credit Score

How Credit Score is Calculated

When you opt for a home loan, a lender will first check your credit score – an important metric to help them evaluate your creditworthiness. One of the most popular credit rating agencies {link to credit bureaus of India} (or credit bureaus) in India is TransUnion CIBIL (Credit Information Bureau India Limited) while others include Experian, CRIF High Mark and Equifax. These are all licensed by the Reserve Bank of India (RBI). Your credit score will be a three-digital number ranging between 300 and 900, with a higher score indicating a better one and increasing your chances of getting a loan approved. With unsecured loans like a personal loan, you actually have the chance of successfully negotiating the interest rate in case of a better score. However, make no mistake – a higher score does not guarantee a loan approval; the lender will take into account a number factors such as your loan repayment capacity and other financial obligations. Know all about what’s a good credit score and how important credit score is for a home loan!  {link to how important is credit score for a home loan} 
 

Get Your FREE Credit Report
 

Factors Considered While Calculating Your Credit Score 

These are the main factors credit agencies consider while calculating your credit score: 

  1. Credit History (30% weightage): It’s well-known that credit history carries a high weightage in your credit score calculation (30%). Lenders share a detailed account of the borrower’s personal as well as credit-related information for bureaus to decode and create a credit report with a final credit score.  

The credit bureau collates a record of your EMI and bill payments made over the last 3 years. The credit report lists the status of each account – stating whether it has been settled, written off or has an outstanding amount. It also covers your Days Past due details or DPD – a number indicating how many months’ payment is due for any given month. This clearly means that any prior default or delay in paying EMI (Equated Monthly installments) on a loan or a late payment of a credit card bill will weaken your credit score. 

  1. Credit Mix/Type & Duration (25% weightage): This comprises the composition of secured and unsecured loans in your loan portfolio. Unsecured loans are the loans not backed by security such as credit card and personal loans while secured loans such as home loans and auto loans come with collaterals. Any type of default will have a negative impact but a higher composition of unsecured loans results in a lower score even if you have made timely payments. On the other hand, secured loans paid in a timely fashion have a positive impact on your credit score. 
  1. Credit Usage (25% weightage): This is calculated using two metrics – your credit balance (amount you’ve taken on the limit) and your credit limit. To calculate it, you simply have to divide the limit by the balance and multiply by 100. Increasing utilization shows that your financial burdens are increasing with time and taken negatively. 
     
  1. Other Factors (20% weightage): This is displayed under the “Enquiry” section of the Report and includes aspects such as how many credit applications you may have made in the past. A high number of applications reduces your chances of securing a loan.    

Now that you know how the score is calculated, read all you need to know about how to improve your credit score! {link to how to improve your credit score}. And if you’re contemplating buying a house, don’t miss the chance of availing the most exciting deal on the market right now! Simply get in touch with a Fincity advisor right away at 1234567890  and they’ll help you with everything from getting the lowest-interest loans quickly to ensuring your entire loan amount is disbursed without hassle.    

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Home Loan or Cash Payment: Which is Better?

Historically, home loans have been an obvious choice for middle class borrowers when they decide to buy a house. But every time one starts looking for one, a nudging question presents itself – is it smart to opt for a home loan or is it better to wait and first save up the funds required and then buy a house? The decision hangs on a lot of factors such as the home buyer’s age, income, current/future financial obligations, current financial status and buying intent (personal use or investment), to name a few.

Now, one cannot argue the advantages of paying for a house using your own funds.

i)  Firstly, the stress-free living when you’re dealing with no EMIs to pay.  

ii) Then, of course the fact that you’re actually saving a considerable amount, more than 100%   of the original property value (during purchase) in interest when you take a loan for a 20 year tenure.   

iii) Thirdly, you won’t have to deal with the hours of paperwork involved. 
 

Although true that when you purchase a home with your own funds, you’ll be saving on years (and maybe decades) of EMI payments, however, you should not get carried away and do it at the risk of depleting your retirement savings or emergency funds. A  digital loans platform like Fincity will help in finding you the best home loans at the lowest interest rates (as low as 7.2%).The best part, you’ll get your loan sanctioned and disbursed in 10 minutes at zero cost!    

It may not appear so from the surface, but if looked closely, there are some undeniable benefits of opting for a home loan to buy a house. 

i) Firstly, according to tax benefits stated under Section 80C of the Income Tax Act, you can claim up to Rs. 1.5 lakh deduction for a self-occupied property funded by a home loan. You can additionally claim deduction (up to Rs. 2 lakhs) on the interest component of your home loan EMI. Both of these together deliver a high quantum of tax savings.  

ii) Secondly, you won’t lock all your savings into one single investment, sacrificing your liquidity.  

iii) Thirdly, it allows you the chance to invest in a bigger house or choose a better locality. 

iv) Fourthly, timely repayments of loan helps increase your credit score and therefore creditworthiness, making it easier for you to get loans and credit cards in the future. (Check your current credit score here) 

Credible financial experts strongly recommend diversifying your investment portfolios, and refraining from locking all your savings into one asset. Make an assessment of how your money can be best used to reap maximum long-term benefits. Plus liquidating your property investment by selling it is a time-consuming one that won’t give you the best returns if done in a hurry.   
 

Therefore, if you have the funds to invest a good portion of it in a property without affecting liquidity, you should definitely purchase a home without a home loan. Otherwise, you should allocate a portion of your funds to property purchase, and the rest to a number of other investments, and pay off the remaining amount with a home loan.

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What is Home Equity Line of Credit (HELOC)?

As time passes and your property’s value increases while you pay your home loan, your equity in your house also rises. Your equity in the property is essentially the difference between its current market value and the outstanding home loan on it. You can leverage this equity to avail of a Home Equity Line of Credit (HELOC) that works as a revolving line of credit that you can use for home improvement expenses or to pay off a high-interest credit card debt.

How Home Equity Line of Credit Works 

First, the lender will evaluate your equity in the property by deducting your outstanding home loan from the property’s assessed value. You can borrow anywhere between 60-85% of this amount. Let’s take an example. If your house is valued at Rs.60 lakhs and you still have Rs.30 lakhs due on your home loan, you own Rs.30 lakhs in home equity. You can use this to borrow up to Rs.25.5 lakhs subject to a number of factors such as your credit score, income, property document clearance, etc.  

The draw or waiting period is typically 5 to 10 years long – during which the borrower only pays off the interest component on the loaned amount. The borrower starts repaying the principal amount once the draw period ends.

How HELOC is Different from Fixed Home Equity Loan 

A fixed home equity loan is repaid in fixed monthly installments over a decided number of years at a fixed rate of interest. A Home Equity Line of Credit (HELOC) is a revolving credit similar to a credit card in function; it allows you to utilize only as much credit as you require without having to pay interest on the unused balance. HELOCs also generally have a variable rate of interest.

Reasons Why You Should Avail a HELOC 

The money you borrow with a Home Equity Line of Credit (HELOC) can be used for any purpose. However, the main reasons borrowers avail of a HELOC are: 

i) To fund home renovation projects: If done with a plan in mind, this can actually raise the value of your property giving you more equity in the house. It’s a convenient way to finance such projects because you can borrow only the amount that you need to make payments in each stage. 

ii) For low-interest line of credit: If you find yourself in a mountain of debt with medical bills, high-interest credit card dues, etc., you can pay off high-interest debts with a low-interest HELOC. If you’re considering this, it’s important that you remember the risk involved in case you keep increasing the debt on your HELOC. Make sure to pay off your HELOC debt responsibly to avoid losing ownership of your house in the case that you’re unable to.  

ii) Other Reasons: People also use HELOC to pay their children’s tuition fees or to finance their new business. No matter where you put the funds, make sure to be wary of the potential consequences in case of failure of repayment.  

HELOC – Eligibility 

Once you apply for a HELOC, the lender will conduct a property assessment to understand the value of your home and to determine the equity you have in it.  They will furthermore run a credit check and evaluate your property documents and information related to your income, obligations, etc., before deciding on whether you qualify for a Home Equity Line of Credit. A credit score of 650 and above is preferred; your credit score and the equity you have in the property are key factors that influence your loan terms. If your home equity is low, having a high credit score may prove helpful in availing a HELOC with beneficial terms. Lenders will also check your Debt-to-income (DTI) ratio or the portion of your income that is used to pay off outstanding debts, your employment status and duration, and your financial history particularly past cases of foreclosures or bankruptcies. 

It’s clearly important that you keep an eye on your credit score and take measures to keep it as high as possible. Get your free credit report now to check your current score. Remember, improving your credit score increases your chances of qualifying for Home Equity Line of Credit. And of course, you can always reach out to our financial advisors at xyz@fincity.com for assistance on how to improve you credit score quickly. 

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Hidden Charges You Can Expect on Your Home Loan

When you buy a home and scour through the myriad of home loan products available to you, you’ll notice that rate tables often display basic details of the product, loan tenure, interest rate and the approximate monthly EMI applicable in each case. But besides these, there are a few other charges that may also apply when you get a home loan. Let’s take a look at these hidden fees and charges: 
 

i)  MODT Charges: MODT or Memorandum for Deposit of Title Deed is essentially an undertaking by the borrower stating that they have submitted the title documents of the property with the bank at their own free will. This charge may vary depending on the state you’re taking the loan from. 

Karnataka – 0.2% of loan amount 

Delhi – NA 

Gurgaon – NA 

Pune/Mumbai – NA 

Hyderabad – 0.1-0.5% of loan amount 

 
ii) Processing Fee: Also known as loan origination fee, this fee is levied by the lender to process your loan application, and is usually a small percentage of the loan amount you apply for. The charge may vary from lender to lender and may even change at their discretion.  

Check the table below to know the processing fee charged by our partner lenders. 

Note: Interest rate and processing fee is subject to change at the discretion of the lender. 

iii) Home Loan insurance: This is not always mandatory and may depend on the lender. However, Fincity recommends that you opt for a Home Loan insurance to protect your family against the burden of loan repayment in case of temporary/permanent disability, loss of job, death or any such eventuality. To make the payment more comfortable, most borrowers opt to pay the insurance premium along with the monthly loan EMI. 

iv) Khata affidavit (if khata is not available): This is a legal document used to compute and file property taxes in Karnataka. It’s not a property ownership document – it simply identifies that the owner is liable to pay property taxes. A Khata includes property details such as owner details and the property identification number, size, location, built-up area, carpet area and tax assessment. This document is required when you apply for a home loan. 

In case you do not possess a khata affidavit, some lenders may charge a franking and notary fee of Rs.200 while others may not levy a charge for this. 

v) Home Loan Balance Transfer annexure: In case you refinance your home loan, i.e., transfer an existing loan to a new lender at a better rate, you will need  a home loan balance transfer annexure. Generally, Rs.200 franking and notary charges apply for this. However, some lenders do not charge a fee for the purpose. 

Besides the abovementioned charges, the lender may levy an administrative fee for recordkeeping of your loan, document charges to retrieve documents during closure or pre-closure of loan, a property inspection fee, legal fee, etc.

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Floating & Fixed Rate of Interest: What’s the Difference?

There’s no doubt that taking a home loan itself is one of the biggest decisions taken by people but it’s equally important to choose a home loan product carefully that offers you the best possible interest rate. Once you do decide on the product, you’ll have to choose what kind of interest to go for: floating or fixed. Let’s understand in detail how each is different.

What do you mean by Fixed Interest Rate? 

A loan at a fixed interest rate requires the borrower to repay the loan in fixed and equal EMIs (Equated monthly installment) through the tenure agreed upon with the lender. In this case, the amount to be repaid is constant and not influenced by the financial market conditions. So, it’s advisable to keep a track of financial trends to understand if the current market offers the best interest rates. If that’s the case or if the forecasts predict a spike in interest rates in the near future, going for a fixed interest rate will be a safe choice.   

And what is Floating Interest Rate? 

In this scenario, the interest rate fluctuates as per the ups and downs in the financial market. The interest rate is determined by the base rate the lender offers, meaning if there is a variation in base rate, the interest rate automatically gets revised, impacting your EMI amount.

However, it’s interesting to note that overall floating rates are cheaper than fixed interest rates. On a general note, fixed interest rates are 1-2.5% higher than floating rates. The fluctuation in rates may make it difficult to plan finances in advances, but these ups and downs are temporary and lenders (banks and NBFC) these days offer home loans at competitive (floating) interest rates.

Difference between Fixed and Floating Interest Rates 
Fixed Interest Floating Interest 
Is fixed and not affected by market conditions Undergoes changes according to market conditions 
Higher Flexible, often cumulatively lower 
Fixed EMI amount EMI flexible as per interest rate or MCLR by RBI 
Easier to pre-plan finances Unpredictable and difficult to plan finances beforehand 
Lower Risk with fixed amount Higher Risk but likely to generate more savings 
Ideal for short-term (up to 10 yrs) Ideal for long-term (10-30 yrs) 

The fixed interest rate might be the best option for people nearing retirement as they would prefer to plan their expense, generally have enough savings with a comfortable income and would like to avoid risks. People in their 20s or people who have numerous years left in the workforce prefer the floating interest rate as they can afford to take the risk, have enough time to pay off the loan and get the chance to enjoy a dip in interest rate numerous times through their loan tenure.    

To give you a better understanding, let’s also take a quick look at the interest rates at which leading lenders currently offer home loans on Fincity.  

Note: The rates below are subject to change at the lender’s discretion or as per RBI directives. 

Converting from Fixed to Floating Interest Rates & Vice Versa

It is possible to shift from fixed to floating interest rate and vice versa. When you choose to, the lender will charge you a conversion fee of up to 2%. 

It is also possible to prepay the loan amount before the tenure ends. In this case too you’ll be charged a nominal penalty fee of 2-2.5% of the outstanding principal amount.  

Before you focus on your home loan options, know your eligibility with Fincity Loan Eligibility Calculator. You can then compare home loan offerings by 50+ lenders and even know the EMI you’d have to pay each month with our EMI Calculator.

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Fincity’s E-Home Loans

What is an E-Home Loan? 

Digital loans platform Fincity brings you 1000+ digitized home loan products with the lowest interest rates (as low as 6.9%) from 50+ leading financial institutions/banks and NBFCs. Our mission is to bring home loan to you from comfort / convenience of your home in an end-to-end digital, speedy and transparent manner – being involved in every step of the way right from home loan application all the way till the loan is disbursed.

Here’s what you can expect when you apply for a paperless E-Home loan on Fincity to fulfil your mortgage needs online (be it for a fresh home loan or refinancing your current home loan): 

i) Total Digitization: Imagine the entire process of home loan application to verification to approval taken care of online without you having to physically step out of your house! With strict verification and security protocols in place, the borrower can have this so-called “tedious” task sorted stress-free and in a matter of minutes at no cost to you. 
 

As you provide information about your requirements, Fincity proprietary technology comes into action! We start working with 50+ lenders and 1,000+ Home Loan products to find the most suitable product for you – we are Customer 1st. You can trust Fincity will provide you with best product in terms of overall loan amount, interest rates, processing fees and other hidden charges. .  

ii) Approval in 10 minutes: Your home loan is approved in just 10 minutes and you get a cashback of up to Rs.30,000, saving you up to 5 lakhs in cost towards agents and middle-men. Plus, you get a free credit report on completion of the application. 

iii) E-Verification: For self-attestation of the loan document, E-KYC and e-signing will be required. Your Aadhar card number will be used to verify details. Since Fincity is committed to speeding up the sanctioning process, a cash crisis is something you will no more have to worry about while your home is under construction.  

iv) Swift Process: Since the process occurs completely online, the process will be fast while being secure.  

v) Assured Loans within a defined period: The applied loan amount will be sanctioned and disbursed within a communicated period. This leaves no confusion on how much and within how long the budget will be available to you. 

vi) Access to Expert Guidance for free: Fincity’s in-house finance experts are available to you at only a click for all the guidance, advice or know-how you need. Write to us on hl@fincity.com or call on (+91)7022987485 to speak to an expert! 

Get Fast Home Loans in 5 steps within 10 minutes 

  1. Sign up: Sign up and fill up the application with basic personal details. 
  1. Check Credit Score: Get a free Credit Report to know your creditworthiness.  
  1. E-KYC:  Fill up the E-KYC form. 
  1. Income & Property Details: Enter details of your salary and any other source of income.Enter property details like builder name,project name, property address, etc. 
  1. Loan Offers: Explore Loan Offers and find the one most suitable for you. 
  1. E-Sign: Self-attest the document with an e-signature. 

And it’s done; you receive your loan sanction letter!

Looking to buy a property? Know your home loan eligibility first with Fincity’s loan eligibility calculator and explore our carefully curated low-interest home loans.

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Everything You Need to Know About PMAY: Loan Eligibility, Subsidy & More

If you fall under the middle-income category and are actively looking to buy a house, the Pradhan Mantri Awas Yojana – Urban or PMAY (U) is something you should familiarize yourself with. In this article we will go into the details of who can benefit from this scheme and how much interest subsidy they can obtain when availing a home loan.  

The Credit Linked Subsidy Scheme for Middle Income Group or CLSS for MIG I and MIG II implemented in 2017 was initially approved to stay in effect till March 2020, but the government later extended it till March 2021.

When can one avail of this?

You can avail of the PMAY (U) benefits when you take a loan in order to: 

  • buy a house, be it from a builder or developer. 
  • construct a house. 
  • repurchase a house through the secondary market. 
  • make enhancements on your existing house, i.e. adding an additional room, kitchen, etc.      

Note: No processing fee will be charged by a lender on eligible loan amount under this scheme. The lender may charge the regular processing fee for the loan amount exceeding the amount eligible for PMAY benefit.

But who is eligible? 

MIG I: 

The Middle Income Category (MIG I) includes households with annual income between Rs.6,00,001 and Rs.12,00,000. 

Subsidy: Borrowers under this income category will be allowed 4% interest subsidy on a loan amount of up to Rs.9 lakhs.

MIG II: 

The Middle Income Category (MIG II) covers households with income between Rs.12,00,001 and Rs.18,00,000 per annum.  

Subsidy: People eligible in this case will get a subsidy of 3% on a loan amount of up to Rs.12 lakhs.

  PMAY – U : Subsidy on Home Loan Interest for Middle Income Groups 
Features MIG I MIG II 
Annnual Income Rs. 6-12 lakhs Rs.12-18 lakhs 
Subsidy on Interest 4%             3% 
Eligible Loan Amount Rs.9 lakhs Rs.12 lakhs 
Loan Tenure up to 20 yrs 20 yrs 
Carpet area 160 sq metres 200 sq metres 
NVP subsidy Rs.2.35 lakhs Rs.2.30 lakhs 

Note: The loan amount borrowed beyond the loan amount eligible for subsidy will be lent at a non-subsidized rate. Check out how much loan you’re eligible for with Fincity’s Loan Calculator. 

The government’s mission behind the introduction of this scheme is to provide housing for everyone. The rules clearly state that the beneficiary family, consisting of husband, wife, unmarried son(s) or unmarried daughters, should not own a pucca (all weather dwelling unit) house or have availed of assistance of any housing scheme from the Govt of India. It also underlines that an adult earning member of the household can be treated as a separate household and avail of benefits on condition that they do not own a pucca house anywhere in India.

This means that a married couple will be treated as a separate household and will be eligible to avail of PMAY benefits on a single house owned by either or purchased in joint ownership, provided that none of them own a house already. An unmarried adult child who’s earning can avail of these benefits as well even if they live with their parents or stay on rent.     

Unit Area under PMAY:

As stated above, under CLSS, for MIG I, subsidy on loan interest is available for houses with a maximum carpet area of 160 sq mts while the limit for MIG II is 200 sq mts. Carpet area includes only the actual area where you can lay the carpet and not the thickness of inner/outer walls. When you include the area of the balcony, common area and outer walls what you get is the super built-up area.

Which banks/financial companies offer these? 

Primary lending institutions such as banks, housing financial companies, regional rural banks, urban cooperative banks, state cooperative banks, non-banking financial companies, etc.

How does it work?  

Let’s say someone in falling under the MIG I category wants to avail a loan of Rs.40 lakhs. They pay the initial down payment of 20% i.e. Rs.8 lakhs and take the remaining Rs.32 lakhs as home loan. They are eligible for an interest subsidy of 4% till Rs.9 lakhs, meaning they will have to pay full interest as per the agreement with the lender on Rs.23 lakhs. 

Documents Required for PMAY: 

Application form To be duly filled 
Identity Proof (PAN Card+ any one document): Voter Card Aadhar Card Valid Passport Driving License Photo Credit Card Photo Identity card issued by Govt. body Letter from recognized public authority or public servant verifying the identity of the customer with photograph (not more than 30 days old) 
Address Proof (any one document): Voter Card Aadhar Card Valid Passport Letter from a recognized public authority or public servant verifying the identity and residence of the customer Latest Utility bill Rent agreement on stamp Paper Bank Statements reflecting address of borrowers of any commercial nationalized bank Credit Card Statement not older than 3 months Life Insurance Policy Residence address Certificate /letter by employer on company letterhead Copy of Sale Deed of the property (residence), if owned Municipal or property tax receipt Post office saving bank account statement Pension or family pension payment orders (PPOs) issued to retired employees by Govt. departments or Public Sector Undertakings, if they contain the address Letter of allotment of accommodation from employer issued by State or Central Govt. departments, statutory or regulatory bodies, and public sector undertakings, scheduled commercial banks, financial institutions, and listed companies. Similarly, leave and license agreements with such employers allotting official accommodation Documents issued by Govt. departments of foreign jurisdiction and letter issued by Foreign Embassy or Mission in India 
Proof of Income (all documents mentioned): Salaried: Last 2 months’ salary slip Last 6 months’ bank statement of salaried account Latest Form 16 / ITR  Self-Employed: Income Tax Returns along with computation for last 2 financials years Balance Sheet and Profit & Loss account along with all annexures (duly CA certified and audited if applicable) Last six months current account statement of the business entity and saving account statement of individual 
Other Documents:  Salaried: Documents related to running loans along with 6 months repayment bank statements  Self-Employed: Documents related to running loans along with 6 months repayment bank statements Latest List of shareholding pattern (duly CA/CS certified) MOA (for private Limited companies) Partnership deed (for partnership firms) 
Property Documents (all documents mentioned):   Copy of complete chain documents of the property (as applicable) Copy of Agreement to Sell (if executed) Copy of the Allotment Letter / Buyer Agreement (if applicable) Copy of Receipt/(s) of payment/(s) made to the developer (if applicable) 

NPV and its implications 

The actual subsidy amount on interest is actually the NPV (Net Present Value) of the interest subsidy amount. Let’s assume on a home loan of Rs.9 lakhs, the NPV of 4% comes up to Rs.2.35 lakhs. In this case, an amount of 2.35 lakhs will be deducted from the total amount and you’ll have to pay EMI (Equated Monthly Installments) on the balance of Rs.6.65 lakhs as per the lender’s interest rate.    

The interest subsidy amount will be credited in your loan account upfront resulting in deduction in effective housing loan i.e. from the principal loan amount, and subsequently resulting in lower EMI.

Note: The discount rate for NPV is 9%.

Another point to remember is – to avail of the PMAY benefit, the builder has to complete the project within 5 years. We suggest that you thoroughly research all the conditions applicable on the affordable housing segment along with the benefits that come with it before taking the leap. And while you’re at it, feel free to connect with a Fincity financial expert at hl@fincity.com to guide you along the best path for you!  

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Difference Between Mortgage Loan and Home Equity Loan

Mortgage Loan (also known as loan against property) and Home Equity Loan are both loans you can take from a lender using your property as a collateral. Both these loans can be taken against a residential or commercial property, and the funds you avail from either can be used for reasons ranging from your child’s education, to cover wedding expense, medical bills, etc. Let’s look at the difference between both a little more closely. 

Mortgage loan: A mortage or loan against property (LAP) is a secured loan offered by bank and Housing Finance Companies (HFCs) against the borrower’s property (residential or commercial). Know everything to know about Loan Against Property (LAP) 

Home Equity Loan: Also known as equity loan or second mortgage, a home equity loan is availed against the borrower’s equity in the property. This is only available on full constructed freehold properties. The borrower’s equity in the house serves as collateral for the lender. 

Features Mortgage Loan Home Equity Loan 
Difference by Definition A mortgage loan is taken against the current market value of the propertyA home equity loan is taken against the borrower’s equity in the property, i.e., the difference between the property’s current market value and loan outstanding on it.  
Maximum Loan Term 15 to 20 years, depending on the lender 15 years 
Loan Amount Up to 80% of property value  or up to Rs.10 crores  Up to 75-80% of your equity in the house 
Type of Interest Fixed or Floating Fixed or Home Equity Line of Credit (HELOC) 
Rate of Interest Lower than home equity loan Lower than personal loan 
Prepayment charges Not applicable on loan sanctioned at a floating interest rate Depends on the lender 
Processing Time Up to 10 days, depending on document clearance and verifications 2-4 weeks, depending on document clearance and verifications 
Tax Benefits  Applicable  Not Applicable 
Property Type Available against properties (residential and commercial) under construction Available against fully constructed freehold properties (residential and commercial) with clear title 

Types of Mortgage Loan 

Regular mortgage loan: Also known as a term loan, under this a borrower can avail a lump sum amount at a floating rate. 

Overdraft facility: Under this, the borrower can deposit surplus money into the account and enjoy a reduction in interest. 

Top-up loan: This allows an existing borrower to avail of extra funds after repaying regularly for a certain period of time. 

Types of Home Equity Loan 

Fixed Rate Loan: Under this, a borrower can avail of a high loan amount at an agreed interest rate and repay it over a defined tenure.  

Home Equity Line of Credit (HELOC)This allows the borrower to withdraw funds as and when they need it through an issued credit card or cheque book. 

Want to know if you are eligible for a Mortgage Loan or Home Equity Loan? Connect with a Fincity expert at xyz@fincity.com and have them help you out. We can help you get the lowest-rate loans and offer free assistance up until the loan amount is disbursed. 

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