Home Loan Process at Bank of Baroda
10 Feb 2021
Home Loan Process at Bank of Baroda
Owning a home gives you a sense of financial security. You can easily become a homeowner, thanks to a Home Loan. To make this type of loan more accessible to anyone in need, Bank of Baroda has made the loan application process even more convenient. Now, you do not need to visit the bank several times to get your loan approved. Indeed, you can get approval for your home loan from the comfort of your home. Yes, Bank of Baroda has streamlined the Home Loan process. You can start the loan application process online. Here are the steps you need to follow.
Home Loan Application Process
Visit the bank’s website to check your eligibility and EMI amount
The first step in the Home Loan process is to visit the Bank of Baroda website. Here, you can use the Home Loan eligibility calculator to check the maximum loan amount you can possibly get. You can also check your potential EMI amount by adjusting the sliders.
Fill the application form and submit the documents
Once you’ve checked your eligibility, you need to determine the type of Home Loan you need, and fill the loan application form accordingly. You can download the form from the Home Loan section of the website. You need to provide your necessary details such as your name, age, address, income and employment status, etc. You also have to provide copies of your basic documents such as your ID, age, and address proof, along with a scan of your passport-sized photograph and signature income documents, property documents etc. Once you send these documents, the bank verifies them.
Wait for the loan sanction letter
In the next step of the Housing Loan process, the bank sends you a sanction letter, mentioning the loan amount you can get. This letter is typically valid for 6 months, during which time you can avail disbursement
Home Loan Disbursal Procedure
Drawing up the loan agreement
After you’ve done your bit in the Housing Loan process, the bank takes over. It gives you the format to draw up the loan agreement. You need to execute the Home Loan documents in the manner as per state law. Some of states also require registration of documents. Ensure you read the loan agreement carefully as it contains all the terms of the loan, including how funds will be disbursed.
Funds are disbursed
Based on the clauses in the home loan agreement, the bank disburses the loan amount to you or the builder/seller. In case of loans for under-construction or ready-to-move-in properties, the loan amount is typically disbursed to the builder/seller. On the other hand, funds for Home Renovation loans are paid to you directly. If you opt for Home Construction or Extension Loans, the bank may disburse the funds in instalments, depending on how the construction is progressing. If you transfer your loan from another bank, the funds may be disbursed directly to your original lender.
Once the funds are disbursed, the Housing Loan procedure is officially completed. The loan lasts until you repay it in its entirety. As is apparent, the Home Loan procedure is indeed simple and straightforward. The partially online procedure makes it a great time and energy saver. So, visit the Bank of Baroda website to begin the Home Loan process today!
Home Loan Principal & Interest Rate Explained
Home Loan Principal & Interest Rate Explained
Bank of Baroda offers a wide variety of Home Loans that you can choose from, based on your requirements. The bank offers loans of several lakh to a few crore in various Indian cities and towns. With its streamlined, online process, you can now apply for the loan online through the bank's website. You can even get a pre-approval for the loan, select a property based on your eligibility, and submit your documents online. But before you take on a Home Loan, you should familiarise yourself with the various terminologies associated with the loan; two of which are most crucial. We are talking about the Home Loan principal amount and interest rates. Let's understand these in detail.
What is the Home Loan Principal Amount?
To put it simply, the Home Loan principal is the amount of money financed by the bank to help you buy a property of your choice. The property in question could be cost of newly constructed, a pre-owned property, or an under-construction property. It could also be a plot of land and construction thereon you want to buy. The bank also offers you the necessary finance to construct a property on a piece of land you want to buy, renovate or remodel your existing property. Such financing also falls under the umbrella of the Housing Loan principal amount.
As such, the Home Loan principal amount is nothing but the original amount of money you borrow from the bank as a loan. It is the actual loan amount. Depending on your eligibility, income, and the value of the property you wish to buy, the bank offers maximum financing of 75 to 90 per cent of the property's market value as the principal loan amount. You have to provide the remaining 10 to 25 per cent of the property's value as a down payment.
Example to Help Understand Home Loan Principal Amount
Let's say you want to buy a 2BHK in Pune City. The cost of the flat is Rs. 1 crore. After assessing your eligibility, the bank decides to offer you a loan amount of 75%, while you have to provide the remaining 25% as a down payment. As such, you would be eligible for a loan of Rs. 75lakh and you have to make a down payment of Rs. 25lakh. Thus, your principal on Housing Loan would be Rs. 75 lakh. This amount reduces with every EMI you pay towards Home Loan repayment.
Difference Between in Home Loan Principal & Interest
Having explained what is Home Loan principal, let's understand what interest rate on Home Loans is, and how it differs from the principal loan amount.
Interest is the amount of money the bank charges on principle of the amount loaned to you. The interest rate on a Home Loan is typically expressed as a percentage and calculated as the Home Loan interest.
What is EMI
The EMI you pay towards your Housing Loan comprises both the Housing Loan principal amount and the interest amount. With every EMI you repay, the principal amount reduces. Interest is charged on every month on remaining outstand principal. So gradually with repayment of every EMI, original principal amount is reduced and according every month amount of interest is reduced. Thus in later EMIs, portion of principal is higher and it increases further with every payment of EMI. In the beginning, a significant portion of the EMI goes towards interest repayment, while a smaller portion goes towards repaying the principal amount. This becomes apparent through the bank's amortisation schedule that shows you how your loan repayment is calculated. The amortisation schedule is nothing but a tabular representation of the loan repayment, highlighting the amount going towards the principal amount and interest repayment each month, even though the amount of EMI remains unchanged. As per the amortisation schedule, the amount going towards repaying the principal amount increases progressively every year. You can easily calculate the same with the help of an online tool known as the Home Loan EMI calculator.
So, if you're planning to take on a Home Loan, make sure you understand the concepts of Home Loan principal interest rate and EMI thoroughly. You can now apply for Bank of Baroda Home Loans conveniently. Click here to get started!
Home Loans for Women (Benefits)
All of us dream of become homeowners. It is a way of ensuring lifelong financial security; the kind that does not come from living in a rented home. But buying a home is a complicated process. Whether it is years of savings to be given as down payment, or finding the right locality to invest in; the process of buying a home is elaborate. And since property investments take a huge chunk of savings, most of us rely on home loans, which often last for over 2 decades. However, women borrowers have it a bit easy thanks to government home loan schemes for women. Let’s find out how women can benefit from home loans designed for them.
Reduced Rates of Interest
If you’ve ever purchased anything on a loan, you will know that even a point’s difference in interest rates can amount to a lot of savings. If your interest rate on the loan is high, you always end up paying more. In such a case, even a slight reduction in interest rates can make a lot of difference. This also affects your monthly EMI which is further reduced. Under the government scheme, home loan interest rates for women are reduced by 0.05% by most banks in the country. While this may seem like a small percentile, consider the following example:
Let’s say you take out a home loan of ₹50,00,000 form a bank for a tenure of 20 years. The bank offers an interest rate of 8.65% to its male borrowers and 8.60% to its female borrowers. In this case, the interest outflow for men is ₹55,28,083, but due to the reduced 0.05%, the interest outflow for women is ₹54,89,953. As a result, the savings in interest outflow for women borrowers’ accounts for ₹38,130.
Reduced Stamp Duty Charges
Stamp duty forms a part of the property cost, and the reduced interest rate can make a huge difference in reducing stamp duty charges too. Most lenders provide 80%-90% finance on home loans, with a set percentage of money paid in stamp duty char.ges. But as per the home loan subsidy for women, a concession of 1%-2% is typically applicable on stamp duty charges. If a woman purchases a property worth ₹50,00,000, she can save ₹50,000 to ₹1,00,000 on stamp duty charges alone.
Both, male and female borrowers are eligible for tax deduction on home loan repayments. The maximum tax deduction permitted in principal and interest repayments is ₹1,50,000 and ₹2,00,000 respectively. If a woman borrower applies for a home loan along with her husband, she can receive tax deduction in equal measures.
Longer Repayment Tenures
While male borrowers are typically provided with loan repayment tenures of 20 years and a maximum age of 65 years to repay the loan, whichever is early; home loans for women are offered for tenures of up to 30 years or up to 70 years of age of the borrower, whichever is early.
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