Things You Should Know About the Loans Before Buying The Dream House
Jun 01, 2017 Home Loan
Understanding the aspects of finances surrounding the loans and home buying is a difficult task. And not everyone can understand it. The understanding of financial stuff is put to test when you apply for home loan with the bank or any financial institution.
Endless paperwork can scare and make anyone nervous while buying a home loan. We discuss some of the issues regularly faced by the applicants.
1. Who are co-applicants?
A co-applicant is the person who applies for the loan with you. Certain banks have a pre defined relationship matrix to help with figuring out who can be your co-applicant. In most cases you spouse, son or daughter (if only child) can be your co-applicant. The important thing to keep in mind is that the co-applicants are not necessarily supposed to be the co-owner, but the co-owner has to be the co-applicant of the property. In most cases, minors are not allowed to be the co-applicant.
2. Can I ask my sales agent to fill and sign my application?
No, you cannot. The loan application form (LAF) is your first step towards applying for the loan. The loan officer will go through the details and cross check them for their validity. If there is any error or any information is mismatched, then the application can be put down. It is always advised to fill your own application and never to sign and unfilled form and hand it over to the sales agent. Read the application form properly and make sure you have submitted the required documents.
3. When does the repayment of principal amount start?
The repayment of the principal amount of the loan starts after you have received the entire loan amount from the bank. Before that, you only pay the interest portion of the loan which is called the Pre- EMI interest. Some banks give you the facility and offer you to choose the amount you can pay till you get the possession of the property. Any amount that is over and above the interest amount goes to the principal amount which helps in paying the loan faster.
Understanding the aspects of finances surrounding the loans and home buying is a difficult task. And not everyone can understand it. The understanding of financial stuff is put to test when you apply for home loan with the bank or any financial institution.
Endless paperwork can scare and make anyone nervous while buying a home loan. We discuss some of the issues regularly faced by the applicants.
1. Who are co-applicants?
A co-applicant is the person who applies for the loan with you. Certain banks have a pre defined relationship matrix to help with figuring out who can be your co-applicant. In most cases you spouse, son or daughter (if only child) can be your co-applicant. The important thing to keep in mind is that the co-applicants are not necessarily supposed to be the co-owner, but the co-owner has to be the co-applicant of the property. In most cases, minors are not allowed to be the co-applicant.
2. Can I ask my sales agent to fill and sign my application?
No, you cannot. The loan application form (LAF) is your first step towards applying for the loan. The loan officer will go through the details and cross check them for their validity. If there is any error or any information is mismatched, then the application can be put down. It is always advised to fill your own application and never to sign and unfilled form and hand it over to the sales agent. Read the application form properly and make sure you have submitted the required documents.
3. When does the repayment of principal amount start?
The repayment of the principal amount of the loan starts after you have received the entire loan amount from the bank. Before that, you only pay the interest portion of the loan which is called the Pre- EMI interest. Some banks give you the facility and offer you to choose the amount you can pay till you get the possession of the property. Any amount that is over and above the interest amount goes to the principal amount which helps in paying the loan faster.
4. How long is the sanction letter valid?
Generally, it is valid up to three months from the date it is sanctioned. Some banks offer it up to six months. If you have not availed the loan in that period, you will have to apply for it again.
5. Can I still apply for the loan even if I haven’t finalised the property?
Yes, it is known as pre-approved loans. Pre-approved loans give you the idea of how many loans you can borrow from the bank and what should be your budget.
6. Margin amount?
It is the amount that is paid by the buyer while buying the house. It includes the down payment, registration charges, stamp duty.
7. Escrow account
It is the neutral account held by the third party. The money in the account covers the insurance amount, taxes and other special assessments. The account holder makes sure that the closing of the loan account goes smoothly.
8. Can I change the type of property after I have applied for the loan?
Banks allow you to change the type of property given it is on the same project. You will have to submit a separate request for the same.
9. Standing instruction and Electronic clearing service:
When you give the bank a written instruction to pay the monthly EMI in your loan amount every month, it is standing instruction. In Electronic clearing service, the loan amount is automatically debited towards the loan account without any manual intervention.
10. What is loan sanction condition?
The sanction letter lists all the terms and conditions that need to be fulfilled before the loan are approved. It includes the list of documents and the verification process that you have to go through.
Endless paperwork can scare and make anyone nervous while buying a home loan. We discuss some of the issues regularly faced by the applicants.
1. Who are co-applicants?
A co-applicant is the person who applies for the loan with you. Certain banks have a pre defined relationship matrix to help with figuring out who can be your co-applicant. In most cases you spouse, son or daughter (if only child) can be your co-applicant. The important thing to keep in mind is that the co-applicants are not necessarily supposed to be the co-owner, but the co-owner has to be the co-applicant of the property. In most cases, minors are not allowed to be the co-applicant.
2. Can I ask my sales agent to fill and sign my application?
No, you cannot. The loan application form (LAF) is your first step towards applying for the loan. The loan officer will go through the details and cross check them for their validity. If there is any error or any information is mismatched, then the application can be put down. It is always advised to fill your own application and never to sign and unfilled form and hand it over to the sales agent. Read the application form properly and make sure you have submitted the required documents.
3. When does the repayment of principal amount start?
The repayment of the principal amount of the loan starts after you have received the entire loan amount from the bank. Before that, you only pay the interest portion of the loan which is called the Pre- EMI interest. Some banks give you the facility and offer you to choose the amount you can pay till you get the possession of the property. Any amount that is over and above the interest amount goes to the principal amount which helps in paying the loan faster.
Understanding the aspects of finances surrounding the loans and home buying is a difficult task. And not everyone can understand it. The understanding of financial stuff is put to test when you apply for home loan with the bank or any financial institution.
Endless paperwork can scare and make anyone nervous while buying a home loan. We discuss some of the issues regularly faced by the applicants.
1. Who are co-applicants?
A co-applicant is the person who applies for the loan with you. Certain banks have a pre defined relationship matrix to help with figuring out who can be your co-applicant. In most cases you spouse, son or daughter (if only child) can be your co-applicant. The important thing to keep in mind is that the co-applicants are not necessarily supposed to be the co-owner, but the co-owner has to be the co-applicant of the property. In most cases, minors are not allowed to be the co-applicant.
2. Can I ask my sales agent to fill and sign my application?
No, you cannot. The loan application form (LAF) is your first step towards applying for the loan. The loan officer will go through the details and cross check them for their validity. If there is any error or any information is mismatched, then the application can be put down. It is always advised to fill your own application and never to sign and unfilled form and hand it over to the sales agent. Read the application form properly and make sure you have submitted the required documents.
3. When does the repayment of principal amount start?
The repayment of the principal amount of the loan starts after you have received the entire loan amount from the bank. Before that, you only pay the interest portion of the loan which is called the Pre- EMI interest. Some banks give you the facility and offer you to choose the amount you can pay till you get the possession of the property. Any amount that is over and above the interest amount goes to the principal amount which helps in paying the loan faster.
4. How long is the sanction letter valid?
Generally, it is valid up to three months from the date it is sanctioned. Some banks offer it up to six months. If you have not availed the loan in that period, you will have to apply for it again.
5. Can I still apply for the loan even if I haven’t finalised the property?
Yes, it is known as pre-approved loans. Pre-approved loans give you the idea of how many loans you can borrow from the bank and what should be your budget.
6. Margin amount?
It is the amount that is paid by the buyer while buying the house. It includes the down payment, registration charges, stamp duty.
7. Escrow account
It is the neutral account held by the third party. The money in the account covers the insurance amount, taxes and other special assessments. The account holder makes sure that the closing of the loan account goes smoothly.
8. Can I change the type of property after I have applied for the loan?
Banks allow you to change the type of property given it is on the same project. You will have to submit a separate request for the same.
9. Standing instruction and Electronic clearing service:
When you give the bank a written instruction to pay the monthly EMI in your loan amount every month, it is standing instruction. In Electronic clearing service, the loan amount is automatically debited towards the loan account without any manual intervention.
10. What is loan sanction condition?
The sanction letter lists all the terms and conditions that need to be fulfilled before the loan are approved. It includes the list of documents and the verification process that you have to go through.
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