Buying our own Home is usually a dream that people nurture right from a
young age and the dream grows as we grow older. The moment we take up a job,
the wheels get set in motion and we start thinking about when to sign on the
dotted line. The purpose of this article is to help you understand the
specifics of buying a Home on Loan and how Aditya Birla Finance Home Loans can
help you make your dream a reality.
Things an Individual Must Do Before Deciding to Buy a Home on Loan
A Home Loan is a long term financial commitment and hence requires a lot
of thinking before we eventually sign up. You will be expected to make monthly
EMI payments for the next 10-15 years or more and hence we need to be, firstly,
financially and secondly, mentally prepared to take up this commitment.
As a rule of the thumb, DO NOT opt for a Home loan that would require
you to make payments more than 50% of your Fixed Monthly Income towards EMI.
This is to make sure that you and your family does not have to compromise on
your living standards while you repay the loan.
Why a Home Loan?
A majority of us are from the working class or the middle-class as we
are colloquially referred to and hence, unless we hit the lottery jackpot,
buying a house that costs a more than a few lakhs by paying a full-cash
settlement is pretty much out of question. In order to motivate people to buy
their own homes the Government of India has been taking up multiple measures in
the past few years which include reduction of interest rates and elimination of
pre-payment penalties which were rampant up until a few years ago.
Banks and Financial Institutions alike have realized the potential
business in a populous country like India and have made Home Loans very
attractive. They offer loans to finance a big chunk of the property purchase
wherein the customer repays the loan over 10 to 20 years in monthly instalments.
If I were asked to make a Rs 25 lakh payment toward a house now or pay
Rs 25,000 per month for the next 15 years – guess which one I would choose? Get
the Picture?
Ever wonder why Banks and Financial Institutions offer such long term loans? On average, a customer pays around 200% or more of the loan sanctioned amount during the entire loan tenure. Yes, if you take a Rs 25 lakh loan for 15 or 20 years, chances are you will pay around Rs 50 lakhs or maybe even more depending on the Interest Rate. Now, do you understand why Home Loans is a popular business for Banks and Financial Institutions?
Why Choosing the Right Home Loan is Very Important?
As I mentioned a couple of paragraphs before, taking up a home loan is a
crucial decision that is going to impact your life for the next 10 to 20 years.
Every Bank and/or Financial Institution has its own formulae to determine your
loan eligibility. Some institutions offer top-class service while some drag
their feet the moment you sign the dotted line on the home loan agreement.
Every institution has its own fee structure and similarly each of them have
their own loan interest rate.
As customers we must focus on an institution that:
-
Offers a Competitive Interest Rate
-
Offers Good Customer Service
-
Offers Good Loan Amount (Depending on our Eligibility)
-
Does Not Charge Exorbitant Fees
-
Does Not Expect us to buy other Financial Products as
a Bundle Package just because we are asking them for a Loan
The Home Loan Process
The Home Loan Process is pretty straightforward. Most banks and
financial institutions are willing to give you a provisional loan approval
letter based on your income and eligibility criteria even before you actually
identify your Dream Home. In fact, this would be a recommended approach because
you can easily narrow down the budget range within which you would have to limit
your search to.
As soon as we identify a property that peaks our interest, we need to
contact the builder and acquire the property related documentation. Along with
this documentation a Formal Loan Application would have to be made to the
Bank/Financial Institution that is financing the home loan. The institution on
its part would verify the document papers, the credentials of the builder etc
and once they are confident that the property is worth the price being quoted
and that this is a legit purchase, they will sanction the loan.
About Aditya Birla Housing Finance
The Aditya Birla Group is arguably one of the most popular business
houses/families in India and is respected across the country. Aditya Birla
Housing Finance Limited (ABHFL) is one of eight subsidiaries under the Aditya
Birla Financial Services Group (ABFSG) umbrella. ABHFL specializes in Home loans, Home Improvement
Loans, Loan Against Property, Construction Loans etc. They are a relative newcomer into the Housing
Finance Space who got their approval only in Q3 of 2014 and have been
aggressively expanding in the last 2 years. They also aim to give you a loan
that corresponds with your true worth.
Why Aditya Birla Housing Finance Loans?
As one of the most respected business families in the country, one thing
is certain – they know how to run a successful business. Secondly, as a new
player in the market, they are eager to expand their customer base. In a
country like India where almost every bank in the locality offers Home Loans,
Customer Service is going to be the key difference maker. Unless they can offer
markedly high quality customer services, customers would probably not be too
keen on signing up for new loans or move their existing loans to them. Some of
the reasons why ABHF Home Loans may be a good choice include:
·
Attractive Interest Rates (Current Rate is 9.65%)
·
Loan Tenure of up to 20 years
·
Quick and Transparent Processing
·
NIL Prepayment charges on Floating Rate Home Loans
(After 1 year)
·
Personalized / Door step service
·
Attractive Balance Transfer Options available
Loan Eligibility Criteria for ABHF Home Loans
Minimum Age: 21 Years
Maximum Age @ Loan Maturity: 60 years (This means the loan must mature
by the time the applicant is 60. So, if you are 44 years old, you cannot get a
20 year tenure. You will be asked to choose the 15 year tenure instead)
Minimum Loan Amount: 25 Lakhs for Metros (15 Lakhs for Non-Metro’s)
% of Property Value – Offered as Loan:
- Up to 20 Lakhs – 90%
- 20 to 75 Lakhs – 80%
- More than 75 Lakhs – 75%
Documentation Required for Home Loan
ABHF has one of the simplest documentation requirements among
institutions offering home loans. For Salaried Individuals below are the items
required:
-
Identity Proof and Address Proof (PAN Card, Passport, Aadhaar Card, Voters ID, Driving License etc.)
-
Income Proof (Last 3 Months Itemized Payslip showing
all deductions and Form 16/Tax Returns for the last 2 years)
-
Last 6 Month Bank Statement (On the Account where
Salary or Income is Credited)
-
Any other Income (Ex: Rent)
-
Property Documents (The full bunch including all
requisite sanctions & approvals by the relevant authorities)
If you are Self-Employed/Business Owner, the only difference here is
that, a Chartered Accountant has to certify the computed annual income as
claimed in your tax returns.
Note: Don’t worry too much about the Property Documents part in terms of what
documents are required. Usually Builders will have a pack of documents that
they will hand-over to prospective buyers for the purpose of home loan because
frankly speaking, easily 75-80% of the people who buy homes get it on home
loan. To add further, the bank/financial institution will do a proper
due-diligence on the property and will ask you for specific additional
documentation about the property (if required)
List of Cities that are serviced by ABHF
As of the time of this writing, below are the cities/locations in India
where Aditya Birla Housing Finance is offering its services:
Some Last Words:
As mentioned earlier in this article, signing up for a home loan is a
very long term commitment with strong financial implications. So, please think
carefully before you sign the papers. Getting a home loan can be a harrowing
experience for some especially if you choose the wrong Bank/Financial
Institution for the same. Choose one that has a good reputation and offers
excellent customer service. Use Google, search for feedback from other people who
have taken loans from the institution you are considering. Who knows, you may
avoid a disaster after reading a few reviews on the Internet.
Happy Home Buying!!!
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