Go Through the Most Common Questions on Home Loans

As purchasing a home is a complicated procedure and needs considerable investment and savings, many seekers for depend upon housing loan, which funds 75-90 percent of the cost of the property. However, availing big ticket loan amounts through home loan has various nuances linked with it. For this reason, it is crucial to consider the home loan eligibility criteria, loan repayment tenure, rate of interest levied and EMIs. Such factors are considerably important as they might impact your monthly budget. 

While a home loan does come with specific benefits, there are various ambiguous facts that you as a seeker of housing loan may think twice before you opt for it. Here are some of the most common questions about home loans: 

How can you select the right lender for a home loan? 

Deciding on the financial institution is a crucial decision that you must make. However, specific factors that you should consider are rate of interest, prepayment charges, processing charges, repayment tenure, transfer charges, and eligibility criteria. Ensure that you check all the charges of distinct lenders and choose the one levying the lowest charge. 

What home loan eligibility criteria are followed by the lenders for evaluation?

Major parameters that the lenders check before approving your home loan are your credit score and property details. The ideal credit score for a home loan must be 750 and above. Moreover, other parameters like your monthly income, age, qualification, number of dependents, savings, occupation stability etc., are also checked. 

Can lenders sanction 100% of the amount through home loan?

As per the RBI guidelines, no lender can sanction 100% of the loan amount through housing loan. In most cases, lenders usually sanction up to 75-90% of the overall property value. The rest amount must be contributed from your pocket in the form of down payment. 

What are the documents required for home loan approval? 

Major documents required for home loan approval include your identity proof, form 16, salary slip, bank statements, residential proof etc. 

What are the home loan interest rate options provided by the lenders?

Fixed rates, floating rates and mixed rates are 3 common housing loan interest rate options offered by the lenders. Floating rate home loans have variable rates that fluctuate according to the market. As rates are variable in case of floating rate loans, EMI tends to change each time the rate changes.  Fixed rates have the same rate for the whole loan repayment tenure. Here in this case the EMI stays constant. Lastly, in the case of mixed rate home loans, the rate remains fixed for a predetermined period, say 2-3 years of the tenure, after this the home loan switches to floating rate. 

Does the loan repayment tenure impact its cost? 

The home loan cost is directly proportional to the loan repayment tenure. With higher repayment tenure, EMI amount falls, but the overall interest outgo rises. Shorter repayment tenure means a higher EMI but lower interest component. Having a lower repayment tenure considerably lowers your overall loan cost. 


The above answers on common home questions are aimed to provide you with better understanding to take an informed decision. Ensure to apply for home loan, once you have considered various lenders and selected the one offering lowest rate and better terms and conditions. 

Jennifer Winget

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