How to Apply for a Home Loan Online?

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Everybody wants something that can be called their own. A home is the first thing that comes to mind when we think of a secured future and a big credit goes to all the banks that are making these dreams possible.

A decade back, the home loan procedure was time-consuming and intricate but not anymore. The process to apply for a housing loan online has become quite easy and user friendly with the advent of technology and the internet.

Now, one can easily avail home loans in a hassle-free way and also, processing a home loan application is only a few hours away, given that the applicant submits all the required documents properly. The procedure to take a home loan varies from one bank to the other, however, the overall procedure is more or less the same.

Basic Procedure to Apply for Home Loan

Whether it’s online or offline, to apply for a home loan, you need to be eligible first in front of your desired bank or any other financial institution. Whether you are salaried or self-employed, residing in Tier 1 or Tier 3 cities – you can always apply for a home loan online under different home loan schemes. Even co-applicants are acceptable in home loan cases. One most important thing that can be a hurdle is your credit score – when your credit score is low, you need a co-applicant for improving your credit score. This helps you to get home loans conveniently.

Home Loan Interest Rates

The interest rates for home loan rates have significantly declined with the introduction of benefiting schemes by the government like PMAY and RERA Act, and which makes this the best time to buy a home. The lowest home loan interest rates on home loans today are around 8.45% per annum for women and 8.50% per annum for others.

Best Bank for Home Loan

Deciding which bank to choose for a home loan can be a tricky task. To achieve that, check thoroughly the top 10 banks’ home loan interest rates and compare their rates based on different parameters like current interest rates, charges like processing fees, prepayment charges, lending process, documents required and customer service of banks regularly

Read more: Curious About Hard Money Lending?

Bank of Baroda, Central Bank of India, Bank of India are the best-fit for home loans with their rate of interest rates starting from 7.25%. Banks like Axis Bank, Kotak Bank, and ICICI Bank, are some of the best banks for a home loan as they provide quick loan disbursal with low-interest rates. Citibank can be a preferred choice as it charges zero processing fees.

10 Banks that Provide Best Housing Loan Interest Rate as of May 2020

Bank Home Loan Rate
SBI 7.35%
HDFC 7.50%
Citibank 8.20%
Bank of Baroda 7.25%
ICICI Bank 8.10%
Axis Bank 7.75%
PNB Housing Finance 8.95%
LIC Housing Finance 7.50%
Indiabulls 9.25%
DBS Bank 7.70%

Detailed Procedure For Home Loan Online

The stepwise procedure to complete the home loan process is as follows

  • Fill The Loan Application Form online
  • The bank’s representative usually gets in touch with you within 24 hours.
  • Pay The Processing Fee and Submit your documents to the representative
  • Discussion With The Bank
  • Valuation Of The Documents
  • The Sanction/Approval Process
  • Processing the Offer Letter
  • Next, the Property Papers Followed By A Legal Check is processed
  • Technical Check & The Site Estimation
  • Dealing the Final Loan, Signing The Agreement, & Disbursal

How is Home Loan Interest Calculated?

Once you have availed the home loan, you need to pay the housing loan interest, i.e. the EMI you need to pay on your housing loans. Calculating the interest each and every time can be troublesome; however one can use the home loan EMI calculator online to compute the EMI. You just need to enter the basic details pertaining to your home loan, viz. The amount of the loan, interest rate, and the maximum tenure.

Home Loan Fees and Charges

There are certain fees and charges associated with your home loan and it differs from bank to bank. The charges may vary depending on the type of loan you are applying for, the following charges may be levied:

Processing fees: A one-time non-refundable fee that needs to be paid to the home loan provider after the loan application gets processed and approved. The processing charge varies from bank to and also the loan scheme you are applying for.

Read more: Home Loan Guide for First Time Home Buyers in India

Prepayment charges: Prepayment charges is a penalty fee which you will have to pay the lender if you plan on repaying your home loan before the completion of the loan tenure.

Conversion fees: Some banks charge a fee called conversion fee when you want to switch to a different loan to reduce the interest rate associated with your current scheme.

Insufficient Charges: As the name suggests, this fee is charged when the lender finds that a cheque issued by the borrower is dishonored due to certain reasons such as insufficient funds in the borrower’s account.

Default charges: Lenders also charge a penalty on late repayments i.e. if you fail to make your Equated Monthly Instalments (EMIs) or Pre-EMIs on time, you shall have to pay the default charges. However, the defaulting charges vary from one bank to another.

Incidental charges: This charge compensates for the expenses incurred by the bank to recover dues from a borrower who is unable to make his monthly installments on time.

Statutory/regulatory charges: The fee includes all charges associated with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), Memorandum of Entry and Deposit, and stamp duty.

Change in loan term: Some banks also charge a nominal fee if you wish to change the tenure associated with your loan.

On a Closing Note

A home loan is a totally secured loan and is indeed the best option to buy a home as there many lenders that offer the best and low-interest rate on home loans. The right lender can surely help you in buying your dream home without burning a hole in your pocket. Home loans provide you the opportunity to buy a house at an affordable EMI payment. Be sure to do due diligence before choosing the one.

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