Different Types of Home Loans in Kerala

There are different types of home loans offered by national and private banks as well as non-banking financial companies in Kerala. You need to understand each option properly to know which one is best for your specific need.

Types of Home Loans in Kerala

1. Land Purchase Loan

Owning a house is better than any rent-out home in Kerala. Having a house that is solely your property is something every individual deserves. To have a house under your name, you need to purchase land as well. But the property cost and then construction cost sounds like a lot of money.

Hence banking for customers provides the opportunity to avail house loans that will fulfill your dream of row houses.

For one to avail of a loan over land, he or she must pass the standard eligibility criteria. The rate of interest of a salaried person can vary from 6.75% to 10.30%. And a businessman would achieve a rate of interest from 6.75% to 11.15%.

If you are looking to purchase a plot of land to construct your home, banks and non-banking financial companies of NBFCs, will lend you about 80 to 85% of the cost of the land that you intend to buy. Also read common land measurment units.

2. Home Construction Loan

This type of loan is given to applicants who already have a plot or piece of land with them, or co-own a plot, and are looking for funds to construct a house on that plot. The process to apply for this type of loan, as well as the approval of the application, is different from the application and approval process of other home loans. The following factors are included:

• The plot of land should have been purchased within one year of applying for the loan
• A rough estimate of the cost of construction should be given to the lender
• If the cost of the plot is not included in the total loan amount, only the estimated cost of constructing the house is considered

3. Home Extension Loan

This type of loan is granted to those who want to add on to their existing house. Some financial companies may include this as part of home improvement loan also. You will need to submit the plan for home extension, which has been approved by the municipal corporation, and the lender’s representative may also visit the site before and during the construction. If they suspect that you are not using the loan for the said purpose, they may reject your application or take legal action (after loan disbursal). There are many property documents required for home loan.

4. Home Improvement Loan

This loan is given when people want to conduct major repairs to their existing house. This could be for painting, changing electrical wiring, digging wells, repairing cracks, and so on.

Banks like HDFC and SBI among others provide you with a lot of benefits with home improvement loans, including- 

Competitive rates- Home loans in Kerala could be rather difficult to avail of unless you have the proper rates to help you out. 

Insurance cover – Some of the low-interest home loans in Kerala also provide insurance covers. It does not compel you to be wary about any damage. 

Flexible spending- With easy home loans in Kerala, you can spend your money without having to worry about the payslip. You can spend it on your interior decorator or your architect and not only the extension of the house property.

5. NRI Home Loans

These are loans granted to non-resident Indians who wish to build a home in Kerala, or buy an apartment in Calicut or any other city in Kerala. Though the process is more or less similar, there is a lot more paperwork involved as the applicant is not a resident of India.

6. Home Conversion Loans

This type of loan is granted to people who want to purchase another home, though they have a house currently. The reason for leaving the current house could be because of poor location, age of the property, or family dispute.

The best loans in Kerala are so called because banks also offer home conversion loans. Nonetheless, you must show proper property documents to file for a conversion loan. Thus you don’t have to rent out a home in Kerala to accumulate money for a new home. 

7. Home Purchase Loan

This is the most availed among home loans in Kerala; people who want to purchase flats in Calicut, or villas or bungalows, can apply for a home purchase loan. Banks and NBFCs provide around 80 to 85% of the price of the flat or individual house that the applicant desires to buy. You will be expected to pay a down payment, and you can choose the tenure of the loan depending on your financial strength, and how quickly you want the loan to be closed. In Kerala we have several financial institutions that offer home loans; these are offered with varying terms, and may be offered at fixed, floating, or hybrid interest rates. Get information about the minimum CIBIL score for home loan.

Let us now look at the types of loans offered by different banks and NNBFCs in Kerala.

Kerala Housing Finance Limited

KHFL has made it their mission to make home loans in Kerala available on easy terms to those without their own homes, primarily in the middle-class family sector. They help to meet the housing needs of both urban and rural regions.

Kerala Housing Finance Home Loan Interest Rates

Rate of interest: 15% p.a. fixed
Processing fee: 2% of the loan amount

Eligibility Criteria

• Any employed or self-employed person, or person who has their own business
• Any resident or NRI
• Age less than 55 years

Other Particulars

• Maximum loan amount KHFL provides is Rs. 25 lakhs; this is subject to the maximum amount sanctioned being 70% of the estimated cost of purchase or construction of a house, and the repaying capacity of the borrower.
• Loan tenure is between 3 and 10 years.
• Loans will be repaid on EMI basis
• Security for the loan will be based on:
  1. The property that is financed which will be placed under equitable mortgage
  2. Personal guarantees from applicant and co-applicant if any, and a third person who is eligible to stand guarantee.

Calculating the Equated Monthly Instalments

It is easy to determine how much money you will need to shell out every month by using the EMI calculator of KHFL. This tool also allows you to know the interest amount you pay each month, and the total cost for each year. Their EMI calculator will give you all these details in a jiffy. It will also help you evaluate your eligibility criteria for availing the loan. Also read apartment owners legal rights are something most people are unaware of.

Documentation for Kerala Housing Finance Home Loan

• For employed applicants, salary certificate
• If self-employed or engaged in business, Income and Expenditure statements for the last three years
• Original title deeds, plans of construction, contract copy (with the builder) and other documents as KHFL sees fit

Benefits of KHFL Loans

• Easy and simple terms
• Transparent process
• Customer-friendly, personalized service
• Speedy approvals and disbursement

Kerala Gramin Bank

This is another major financial institution that provides home loans in Kerala.

Eligibility Criteria for Availing Loan:

• Resident individuals and NRIs who have steady and adequate income
• Individuals less than 55 years of age

Loan Amount Limit

Residents can avail a loan that is 5 times of their annual income.
NRIs can avail loans that are 4 times their annual income.

Other Features

Kerala Gramin Bank requires that the land or house being constructed be mortgaged with them as security. They may also require personal and third party guarantees.

The bank requires the property value to be 125% of the loan limit.

Kerala Gramin Bank allows repayment tenures up to 30 years. You can choose the tenure according to your repayment capacity and how quickly you want the loan to be paid back in full. The bank also allows you a repayment holiday for up to 18 months.

National banks and other NBFCs also grant home loans in Kerala to those individuals who meet their eligibility criteria, which are similar throughout the country. Here are a few prominent institutions:

• Housing Development Finance Corporation or HDFC
• Indiabulls
• SBI Home Loans
• Canara Bank
• Bank of Baroda
• Punjab National Bank

Though each bank has different eligibility criteria, processing systems, and repayment terms, some features are common. HDFC and Indiabulls have lesser paperwork and offer more flexible options where tenure, repayment, foreclosure etc. are concerned; their process of approval/rejection and disbursals are also much quicker than that of banks. Most of them offer the facility of checking eligibility criteria online by just entering a few details. The customer service in NBFCs is also usually more personalized, and warmer. Nationalized banks tend to have more cumbersome paperwork and may take longer to process your application, but the interest rates are likely to be much more favorable.  Also Read some of the economic factors affecting housing market.

How can I get a 100% home loan? 

With the prices of houses skyrocketing, the dream house seems to be very far away. At this time, loans seem to be the only viable option. However, there are a lot of things to consider when it comes to loans. Hidden charges, dishonor charges, and charges with regards to EMI can amount to a good amount of down payment. 

Home loans in Kerala at 100% sound almost impossible. The maximum that most banks go is up to 90%. But with proper documents, such as the mandatory documents, property documents, and other additional documents, can one get a loan of 100%? 

The loan amount is decided under the RBI norms. Unfortunately, these state that individual housing loans can be availed up to 90% of the value. This is acceptable provided that the loan amounts up to 30 lakhs. Similarly, the norms extend to loans availing up to 80% of the value provided that it is from 30 to 75 lakhs. 

Therefore to answer your question, no you cannot avail of a loan of 100%. But you can get the maximum amounts that follow the RBI norms. Nonetheless, Kerala housing Finance Limited ensures that most banks provide the maximum amount to individual customers. 

How is the loan amount calculated?

The loan includes the calculation of the EMI as well. So along with understanding how to calculate the loan, we will include the EMI as well.  Both are calculated as per the RBI norms. Under this topic, we will further learn about the amount as per the period of applicability. 

Most banks calculate loans as per cost security. The amount of loan that you can avail of depends upon the amount of money that you can return. It is repaid every month through EMIs, therefore what the bank calculates is the amount that you can repay. 

First, the bank will look into your income slips and applicability of prepayment charges. It will look into your annual income, rental income, interest income, and sum it up. After that, the income that you save is a standard 30%. 

If you are already paying for another EMI, the savings are then calculated minus the EMI you are already paying. 

For example, if you have the next saving of rs. 12600, and the rate of interest is 10% for 10 years. With calculation, you are eligible for a loan of 9.5 lakhs. 

How much home loan a salaried person can get; minimum salary required for a home loan

There are very few businessmen in the country, some are either extremely successful while others manage somehow. People who are working 9-5 jobs have a steady income. While some choose to stay in their roots, others want a fresh start. 

Your monthly income determines the loan that you can avail of. It is a crucial aspect according to the Kerala state housing board. It also depends upon the credit score, any existing EMIs, and so on. 

The price of a house in Kerala is a lot. A minimum of Rs. 40 lakhs. 

The bank must make sure that if you avail of a loan, you should have the ability to repay it. This avoids additional financial pressure. Hence the minimum salary should be enough to suffice your lifestyle as well as your EMIs. Unless you can make some extra money with rent-out homes in Kerala. 

Therefore according to RBI norms, it is at least Rs. 25,000. 

Now to calculate your home loan, let us say that your monthly salary minus the gratuity, PF, Esi, etc is Rs. 25000. With a rate of interest of 10% for 10 years, you can get a home loan of Rs. 18.6 lakhs. 

This is applicable for a home costing Rs. 40 lakhs.   

To Sum Up

You need to carefully consider every factor, your financial situation, your family situation, career, and so on, before you make a final decision on your lender to buy your dream flat in Calicut.

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