Frequently Asked Questions

There are a variety of home loans you can benefit from:
Home purchase loan: Common loan for purchasing a home.
Home improvement loan: Loan given for implementing repair works and renovations to your home.
Home construction loan: Loan available for the construction of a new home.
Home extension loan: Given for expanding or extending an existing home – eg. addition of an extra room, etc.
Land purchase loan: Sanctioned for purchase of land, for both home construction or investment purposes.Bridge loan: Designed for people who wish to sell the existing home and purchase another. The bridge loan helps finance the new home, until a buyer is found for the old home.
Home Loans for Self Employed: Specially tailored Home Loans for Self employed Professionals and Non-Professionals such as Small retailers, Doctors, Architects etc.
Plot Loans Loan for Purchase of Non Agriculture Plot Loans across India
Home Loan Transfer: Transfer of Home Loans from other Housing finance companies or Banks

EMI (Equated Monthly Installment) is the amount payable to the lending institution every month, till the loan is paid back in full. It consists of a portion of the interest as well as the principal.

The formula for calculating EMI is
EMI Formula: l x r [(1+r)n /(1+r)n-1 ] x 1/12
l = loan amount
r = rate of interest
n = term of the loan

To qualify for a home loan with DHFL, you must be:

• An Indian resident or NRI
• Above 21 years of age at the commencement of the loan
• Below 65 when the loan matures
• Either salaried or self employed

Interest rates varies according to the market conditions and interest rates are dynamic in nature.The interest on home loans in India is usually calculated either on monthly reducing or yearly reducing balance. In some cases, daily reducing basis is also adopted.

Annual reducing:In this system, the principal, for which you pay interest, reduces at the end of the year. Thus you continue to pay interest on a certain portion of the principal which you have actually paid back to the lender. This means EMI for the monthly reducing system is effectively less than the annual reducing system.

Monthly reducing: In this system,
the principal, for which you pay interest, reduces every month as you pay your EMI.

Daily Reducing: In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.

DHFL calculates EMI on monthly reducing basis only.

Fixed rate of interest means the rate of interest remains unchanged for the entire duration of the loan. This means you do not benefit even if home loan interest rates drop in the market during the course of your loan.

In this case, the rate of interest fluctuates based on the market lending rate. This means you stand the risk of paying more than you budgeted for in case the lending rate goes up.

Home loans are usually accompanied by the following costs:
Processing Charge:It’s a fee payable to the DHFL on applying for a loan. It is 1% of the Loan amount of the loan amount for Salaried and 1.5% for Self-employed.
Pre-payment Penalties: If the Housing loan is under Variable/Floating Rate loan and the loan is prepaid through any source, no prepayment charges shall apply If the Housing loan is under fixed rate, the prepayment charges shall apply except in the cases in which the customer is paying out of his ‘Own Sources’. The expression ‘own sources’ indicates that the proceeds of the prepayment should be from ‘any source other than from a bank/HFC/NBFC and/ or a financial institution’.

All other Loans would continue to attract pre-payment penalty upon pre-closure, as per the terms and conditions of the loan agreement which is duly signed and executed by the customer.

Commitment Fees: DHFL doesn’t take any commitment fees from consumers,while some Institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.

Miscellaneous Costs: DHFL levies a minimal charge of Rs. 220 only for Standard documentation charges.

Repayment period options range generally from 5 to 20 years. DHFL offers loans from whose tenure range from 5 to 20 years.

DHFL will finance up to a maximum of 85% of the cost of the house,depending on various factors such as customer’s profile,property, Customer saving’s habits etc.. The balance 15%, sometimes called ‘Seed money’ or “Own contribution”, will have to be provided by the loan applicant. The amount, for which the applicant is eligible, is determined by the age, income, no. of dependents, monthly outgoing and repayment capacity. This varies from case to case.

In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates. DHFL doesn’t ask for Securities. Securities will be asked by DHFL only in few exceptional cases only.

DHFL doesn’t ask for Gurantor. One can have co-applicant instead, while some other financial institutions does ask for 1 or 2 guarantors.

Loans may be applied for before or after selection of property. The loan amounts are sanctioned in principle to let buyers know what amounts they can avail of. This helps them decide their budgets and purchasing power. Actual disbursements are made after satisfactory verification of all necessary documents and completion of specific procedures.

About 3-15 days, subject to proper documentation provided by the Home loan applicant.

On an average, loans are disbursed within 3-15 days after satisfactory and complete documentation and completion of all relevant procedures, including proof that 15% of the cost has been paid upfront to the seller of the property.

DHFL allows Joint applications for Home Loans. If the property has a co-owner he should be a co-applicant for the Home loan, DHFL will the joint incomes of the applicants for deciding the Home loan amount.

Both principal as well as interest of home loans attract tax benefits. With effect from 1st April 2005 (i.e. assessment year 2006-07) under section 24(b) and 80C of the Income Tax Act 1961.
Principal amount of repayment of loan along with other savings such as PF, PPF, Life Insurance premium etc up to a maximum of Rs 1,00,000/- will be eligible for deduction from gross income u/s 80C of Income Tax Act 1961.
For self occupied – Income will be treated as nil and interest payment upto Rs. 1,50,000/- will be treated as minus income which will be adjusted against other income under section 24(b) of the Income Tax Act 1961.
For rental property – It will be adjusted against rental income
Interest paid on loan before completion of construction will be allowed as deduction from income at 20% per year for the next five years.