With the increased prevalence of nuclear family and rapid urbanisation, the demand for housing has been growing significantly. Easier availability of home loan in the last three decades has made it possible to buy a house even by a person at the start of his career.
With increased fear of bad loans to corporate many banks, especially the private banks, have entered into this safer segment of retail lending including Kotak Mahindra Bank Limited (Kotak Bank) which is a prominent player in this segment. Kotak bank home loan is one of the products of the Kotak Bank Limited, which caters to the need of the home buyers, especially in bigger cities.
Kotak Bank is a leading private sector bank which started its operations in February 2003. The bank has grown exponentially in the past 15 years. It is ranked second private sector bank based on its market capitalisation.
Kotak Home Loan Eligibility
While determining whether you will get a Kotak bank home loan or not, Kotak bank takes into account various factors. These include your income levels, the source from where you earn our income, your educational and professional qualification.
Your Kotak home loan eligibility in terms of amount is based on two factors. The first factor is your income. Generally, lenders consider a certain percentage of your monthly income as available for servicing any loan. Based on such disposable income, tenure for repayment opted and rate of interest, the maximum amount of home loan available to you is determined.
Your family size, saving record and any existing loan being serviced are taken into account to determine the proportion of your income available for servicing your home loan. Since any loan can only be serviced during your earning phase, your present age and retirement age for salaried is taken into account for determining the amount of loan for which you can be eligible.
The amount of home loan available to you is also constrained by the value of the property as the loan amount cannot exceed a certain percentage of the value of the property being financed. RBI has restricted funding of any property by banks beyond 90% of the value of the property.
RBI has also prohibited funding of the cost of the stamp duty and registration charges in respect of the property. For small value, Kotak home loan up to Rs. 20 lakhs, the Kotak bank lends up to 90% of the cost of the property.
For home loan between Rs.20 lakhs and 75 lakhs, the amount of loan available gets restricted to 80% of the value of the property. For loans over 75 lakhs, the borrower has to bring in a minimum margin of 25% of the value of the property being purchased.
This restriction on the extent to which the Kotak Bank home loan are available equally applies to the home loan being transferred from any other existing lender, popularly called “balance transfer”
You can enhance your overall Kotak home loan eligibility by joining in your family members like parents, spouse and major children as the combined income of all the joint applicants are considered for determining your repayment capacity.
Kotak Home Loan Documents
The Kotak bank requires you to submit documents of your identity as well as an address like Passport, PAN, Aadhaar, driving licence, utility bill, property documents or leave and licence agreement etc. for Kotak home loan.
Additionally, you have to submit documents like your ITR, salary slip if salaried to establish your income. If you are self-employed you have to submit ITR with profits and loss account as well as the balance sheet for the past two years.
You also have to submit the property documents with a draft copy of the agreement to be executed in case the property has already been identified.
Rate of interest and processing charges
The lending rate of Kotak bank home loan is presently linked with the Marginal Cost of Fund based lending (MCLR) rate. This is the rate below which the bank can not lend as per RBI norms. The best customer may get a home loan at the MCLR rate. Presently the minimum rate being charged on Kotak home loan is 8.75% under floating rate system where the rate of interest changes with changes in the MCLR of the bank.
You can apply for Kotak home loan by submitting your home loan application physically or you can apply for it online. The bank generally charges processing charges up to 1.25% of the home loan amount. Additionally, you also have to pay documentation charges of maximum up to 0.50% of the home loan amount. Currently, the bank has waived its processing charges if you apply for Kotak home loan online. The Kotak Bank also offers a facility for salaried called “Super Fast Home Loan” where the home loan is processed within 4 hours if all the documents required are submitted promptly.
Tenure of home loan
Kotak home loan is available for a maximum period of 20 years but not beyond your retirement age. In the case of the balance transfer, the Kotak bank allows you a tenure not exceeding which is outstanding on the existing loan. The tenure of the Kotak home loan is also dependent on the age of the property and the tenure of your home loan cannot go beyond residue life of the property. The residual life of the property is evaluated by the architects/engineers appointed by the bank for this purpose.
Security and guarantee for the home loan
The borrower has to offer, the property to be purchased/acquired, as security for the Kotak home loan. The bank does not ask for any other collateral or third party guarantee for a home loan. The original agreement duly executed and registered has to be handed over to the bank as security for the home loan.
Repayment of the home loan and Prepayment
The Kotak home loan taken by you has to be repaid by way of monthly EMI (Equated Monthly Instalments), where the component of interest gets reduced gradually and the component of principal repayment increases gradually so that by end of the tenure the home loan is fully paid with interest. You can prepay your home loan partly or fully before its originally fixed tenure. Since the home loans, presently, are given under floating rate, the bank does not charge any charges for foreclosure of Kotak home loan.