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What is a home loan?
Home loan is a loan offered to business owners and salaried individuals for the purchase of a home to reside in. Customers can choose to have a house constructed on their land, extend their existing home by adding a floor etc., buy a resale flat/independent house, buy a new flat/independent house from a developer or transfer the balance from a home loan availed from another financial institution.
What are the factors that determine Home Loans eligibility?
Home loan eligibility is determined by income and repayment capacity. Other important factors include age, qualification, number of dependants, spouse’s income (if any), assets & liabilities, savings history and the stability & continuity of occupation.
What is the tenure of a home loan?
Home loans typically have a maximum tenure of 20 years and a minimum tenure of 5 years.
Is there an age restriction to apply for a home loan?
To apply for a home loan one must be at least 21 years old when the loan period begins and should not exceed an age of 65 years when the loan ends or at the time of superannuation.
Can I apply for a joint loan?
Yes you can apply for a joint loan with your spouse or immediate family like your parents and children. Friends and other contacts do not qualify as a joint applicant with you.
What is floating rate of interest?
A floating interest rate fluctuates or changes along with market conditions. If one chooses a floating interest rate he/she ends up paying a different EMI amount each time the base rate changes. This rate could increase in an increasing interest rate scenario and vice-versa.
What is a fixed rate home loan?
Fixed rate home loans are offered at a predetermined interest rate during the loan period and these remain unchanged during the loan period irrespective of market conditions.
Can I switch from a floating rate home loan to a fixed rate?
Yes you have the option of switching from a floating rate to a fixed rate home loan and the other way around. Charges may be applicable for switching from fixed to floating rate.
How do I repay my home loan?
Your EMI will be deducted directly from your account upon registration of your mandate with NACH (National Automatic Clearance House).
Is prepayment of home loan allowed?
Yes, one can repay the loan amount before completion of the scheduled loan tenure by paying off the amount outstanding. Prepayment charges may be applicable based on the loan type and nature of closure.
What are the documents needed for applying for home loan?
At Chola, the documents required for a Home Loan are minimal. KYC documents (Address Proof such as Aadhaar card, Latest utility bill etc.; Identity Proof such as Pan Card, Driving License etc.) and bank account statements are mandatory. For business owners, proof of business establishment is required. For salaried customers, last 3 months pay slips and form 16 is required.
Is there any tax benefit available on home loans?
Yes you get a tax deduction and other home loan benefits
- Under Section 80C, you can claim deduction upto Rs. 1.5 lakhs for the principal repayment done in the financial year
- Under Section 24B, you can claim deduction for upto Rs. 2 lakhs for the accrual and payment of interest on home loan
- Under Section 80EEA, you can claim deduction for upto Rs. 1.5 lakhs for the interest payment of home loan availed during the financial year for Affordable Housing (Price of the Home is less than Rs.45 Lakhs)
- Under Section 80EE, you can claim deduction of up to Rs. 50,000 for the interest payment of home loan, if the loan is availed during the financial year 2016-17
- In case of joint home loan, each borrower can claim deduction of principal repayment (section 80C) and interest payment (section 24b) if they are also the co-owners of the property.
The above information is summary of relevant provisions under the Income Tax Act. Please read the concerned income tax provisions in detail or consult tax advisors for full understanding of the implications.
What is a top up loan?
If you have an existing home loan and have made timely repayments towards the existing home loan, you may get the option of borrowing an additional loan. This is termed as a top up loan. The interest rates on a top up loan are less than a personal loan and it requires little or no paperwork to process this loan and the money can be used for a range of expenses.
Is having a good credit record important in case of a home loan?
A home loan is a long term loan (upto 20 years tenure), hence lenders want to ensure that they will get their money back in the long term. Therefore, the loan sanctioning authority will check your credit history before sanctioning a home loan to you. However, at Chola it is not mandatory to have a credit score and first time borrowers are also eligible for loans.
What are the different types of home loan?
There are various types of home loans depending upon your specific requirement. Some of the key ones are as follows:
Self-Construction: This type of loan is granted to individuals for the construction of a house on a plot of land that they own.
Purchase – Resale: This type of home loans that is granted to individuals who would buy an existing property (Flat/Independent house) from the previous owner.
Purchase –New home from developer: This type of home loans is granted to individuals to buy a new property (Flat/Independent house) from the builder.
Home Expansion/Extension: This loan is specifically granted to individuals who want to expand their current home to include a new construction such as an additional floor, room, bathroom, etc.
Balance Transfer: Individuals who have already availed a home loan from another financier may choose to transfer the remaining balance to another financier. The property is valued again and therefore the individual may be able to borrow a higher amount than the balance (Top-up) while going in for a Balance Transfer loan.
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