The basics of a home loan


“Home is where the heart is”, a place that gives you emotional and spiritual warmth. Rising real estate prices have made buying a property a daydream for most of us. The home loan is a means that brings you closer to the “house of your dreams”.

Types of home loan

You can enjoy if for construction of a house, purchase of a ready-made house / apartment (from a builder or resale property), residential land, LAPetc

Types of interest on home loans

The loan interest rate normally depends on the loan amount you want to avail. It also depends on the type and term of the loans. Banks will offer you a fixed or variable interest rate option.

Fixed interest rate It allows repayment in fixed equal monthly installments (EMI) over the life of the loan as it does not change with market fluctuations. But essentially that is not the case. All the banks include the reset clause on the fixed interest rate in their home loan agreement documents which clearly state that the bank can revise the rate even during the period of the agreement due to an unforeseen change in the state of the money market.

Floating interest rate It refers to the interest rate which depends on the market and varies according to the economic situation of the country. A client can always prepay part of the loan or repay the entire loan at any time during the term depending on the lender’s standards.

Required documents

  • An application form duly signed by the applicant
  • proof of age
  • Identity proof
  • Proof of address
  • Income documents
  • Bank statements
  • Job details
  • Proof of diplomas (if applicable)
  • Property details (if finalized)
  • A processing fee check

Processing fee

This is a non-refundable fee normally charged by all banks for each home loan application. The same varies from bank to bank and is usually between 0.50% and 1% of the loan amount.

Home Loan Eligibility

An individual’s income determines their eligibility for the loan amount. However, banks have their own methods for estimating eligibility. The term of the loan and the interest rate also play an important role in calculating the loan amount. A good employment and repayment history increases the likelihood of getting a home loan. Customers get the best rates based on their profile, income, turnover, refund history, builder profile, and more.

How much would the bank finance?

Banks typically finance 80-90% of market value as a loan. The customer must first make a down payment (the difference between the actual cost of the property and the loan amount) himself. Banks sometimes even finance registration fees and stamp duty as part of the mortgage.


All major banks like ICICI, HDFC and others cover the loan with insurance to protect the family from debts related to the loan in case of the unfortunate death of the borrower.

At Moneylaxmi, we help you cherish the dream of owning your “property”. Here we have forged links with ICICI, HDFC, Citibank, Standard Chartered and Axis Bank to take the hassle out and help customers with the fastest home loan plans. We guide you here with an attractive interest rate, simple documentation, fast processing and transparent information.

Source by Chaitali Chaudhuri

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