If you successfully settled your personal loan, then you can certainly get a home loan after that. This is because a home loan is a secured loan where the bank has secured the loan against your property and hence there is no risk of default.
The amount of time that takes for you to be eligible depends on the bank and the scheme they offer, but generally most banks allow customers who settle their loans to apply for a new housing finance product immediately. This is because the process of settling your loan (in comparison to willful default) shows the bank that you are financially responsible.
Before applying for a home loan after personal loan settlement, it is advisable to have knowledge about various schemes in the market and their respective interest rates. Also check whether your repayment capacity has increased or decreased due to this settlement. You can do that by checking if the EMI for the new home loan will be within your affordability limits.
It is important to ensure that you have not willfully defaulted in any other loans. You can apply for a home loan only when this has been factored in while considering your eligibility.
What are the documents needed for Home Loan?
Typically, a home loan involves the following documentation:
1) Passport size photographs
2) Identity proof – either AADHAR or PAN card or Voter ID or Passport (any one)
3) Address proof- Utility bill like electricity/telephone bill or property tax receipt (not more than 2 months old), rental agreement or ownership documents (like title deed, registered sale agreement etc.)
4) Salaried income proof – Latest salary slip with form 16 or bank statement of fixed deposits for last 6 months (in case of salaried)
5) Business income proof – Latest Income Tax returns with profit and loss account statement, latest bank statement of business related fixed deposits/current account for last one year (in case of self-employed or business income)
6) For non-resident Indians, Passport or valid Visa copy, work permit/visa copy
7) In some cases, additional documents may be required. You can check with your loan officer for that.
8) If self-employed, then audited balance sheet plus profit and loss account statement of last 2 years is needed too.
What happens if you default on your home loan?
In case the home loan EMI isn’t paid for more than 90 days, the whole home loan becomes a non-performing asset, and the bank may request you to pay back the remaining balance of your mortgage.
To safeguard the lenders’ interests, a law called SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act) was passed by the parliament in 2002. This legislation empowers the lender institution to take and sell the mortgaged property to recover any outstanding loan funds owed to it.
However, in practice, financial institutions do not take such draconian measures right away when a default occurs. Because banks are not in the business of acquiring and selling houses, they only care about timely repayment of their loan, which is why they will try all other options before actually putting the house on the market.
If you are not able to repay your loan, we can help you to settle your loan at 50% or less.
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