FAQs – Pinnacle Consultants

I haven’t decided on the property yet, can I still apply for a home loan?

You can apply for a Home Loan even before you have selected the property. Most lenders sanction pre-approved loans based on your repayment capability as per your income.

Are there any part payment, pre payment or foreclosure charge on Home Loan?

In case of individuals, there is zero part payment, pre payment or foreclosure charge. You can deposit money towards principal payment without any additional cost at any time during the loan tenure.

What are the various types of property Loans that are available?

Banks offer the following types of property loans to cater to borrower’s different needs:

Home Loan
Home Improvement Loan
Plot Purchase and Construction Loan
Commercial Property Purchase Loan
Loan Against Property
Lease Rental Discounting
Balance Transfer and Top Up Loan

What are the securities/ collaterals you need to provide?

Security for the loan is a first and exclusive charge of the property to be financed. For that one has to deposit title deeds and / or such other collateral security as may be necessary. The title to the property should be clear, marketable and free from any encumbrances.

Can I take a Home Loan for a property in one city while I’m working in another city or vice-versa?

Yes, either the property or you should be based in the City where the home loan application is placed. For instance, if a person based in Delhi NCR, but purchasing a property anywhere else in India, he/she can apply through any branch in Delhi NCR. Similarly, if the property is located in Delhi NCR but the person is working/based in another city anywhere in India, can apply through any branch in Delhi NCR.

Is it necessary to provide a Co-Applicant? If yes, who can become a co-applicant?

Although a co-applicant is not necessary for a home loan application in most banks, you can add one to increase the loan eligibility or if the co-applicant is also a co-owner in the property. A Co-Applicant can be the spouse or a first blood relative say father/son, mother/daughter, etc.

My income is not sufficient to get the amount I need, can I add the income of my family members?

Yes, the income of spouse, parents, or son can be added to your income, subject to the age requirements.

Can I take a second home loan for buying another property?

Yes, you can have as many loans against different properties. The only criteria being that you should have the repayment capacity as per your income credentials

When are the processing fees payable?

The fee cheque is required to be given at the time of loan application. It is however sent for banking only after your loan sanction. In case the bank decides to disapprove the application or the sanction terms are non-favorable to you, the fee cheque along with other income papers are returned to you.

What is Pre-EMI interest?

Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of commencement of EMI.

Can I start paying my EMI in case my loan is partly disbursed?

Yes, you can always go ahead with this option. Your EMI on either the total sanctioned amount or disbursed will be charged to you as both options being available. Of course, the interest portion will be charged only on the partly disbursed amount & the Rest will be the Principal portion to be deduced from the partly disbursed amount on a monthly reducing basis.

Interest is charged on Monthly Reducing Basis. What does this mean?

An EMI has 2 components: interest and principal, where the interest is calculated on a monthly reducing basis. This means that the monthly principal component is reduced from the main principal outstanding and then next month’s interest is calculated. This way, the principal on which the interest is charged goes down every month. This results in significant savings for the customer over the tenure of the loan.

What is the difference between fixed and floating rate on loans?

Banks currently offers two types of Interest Rate Scheme – Fixed Rate or Floating Rate:

Fixed rate, as the name suggests, remains unchanged over the entire loan tenure irrespective of the economic conditions prevailing.
The floating rate, on the other hand, is linked to the Bank’s Base rate, which is subject to change. It is a benchmark rate fixed by the Competent Authority, after taking into consideration various components like the cost of funds, interest rates prevailing in the market, cost of operations, and provisioning requirements, etc. among others. The floating rate is arrived at by adding a Margin to this Base Rate. The Margin remains fixed during the entire tenure of the loan, the Base Rate is however subject to changes as per RBI guidelines and other Macro-economic factors.

Can I convert my floating-rate loan to fixed-rate loan or vice versa?

Switching from the Floating-rate scheme to the Fixed-rate scheme and vice versa is permissible. If a fixed rate customer wants to reschedule the loan to a lower interest rate, the same is also permissible. Charges for changing from fixed to floating rates of interest: Min. Rs. 5000 or 1% of the outstanding amount whichever is higher.

What are the Tax Benefits on Home Loans?

As a home loan borrower, you also enjoy Tax Benefits on both Principal & Interest Repayments such as:

Tax deductions of up to Rs. 1.5 lakhs on Principal repayment under Section 80C.

Tax deductions of up to Rs. 2 lakhs on Interest Amount Repaid under Section 24.

Additional home loan interest tax benefits of Rs. 50,000 for first-time home buyers under Section 80EE.

Can I repay my loan ahead of schedule?

Yes, you can pay your loan ahead of schedule, anytime you want to. You are can either choose to reduce the EMI or the tenure or a combination of both.