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Decoding Home Loans and Everything Associated

Blox Social
Posted on
May 1, 2023

Every person desires to own their own home, yet many struggle to fulfil this dream. Banks and financial institutions (FIs) are always willing to offer a helping hand to people and assist them in realising their dream of owning a home. And while banks may be constantly eager to lend money, acquiring a home loan is not a simple procedure.

A home loan is a sort of secured loan offered by financial institutions, and banks also provide other secured loans such as overdrafts and working capital limits. In the following blog, we have deciphered the complexity, jargon, and phrases involved with house loans to simplify the lending process and improve understanding. The application process for a home loan consists of the following: 

Loan application form

A loan application form is a document which provides essential particular and fiscal information about the borrowers to the bank and FI. The details in the loan operation form comprise borrowers' particular demographic information, loan conditions, loan tenure, means of repayment, fiscal details, domestic and business addresses, etc. 


The person or entity who applies for a home loan with the goal of buying a home or piece of property is known as the applicant. Usually, the applicant is the one who will be accountable for paying back the loan sum to the bank or other financial organisation. Depending on the unique conditions and requirements of the loan application, the applicant may be a single person, a married couple, or even a business organisation. 


A co-applicant is an additional individual who applies for the loan with the primary applicant. The co-applicant shares equal responsibility for repaying the loan and is jointly liable for the amount. The income of the co-applicants is conjoined to enhance loan eligibility. A blood relative or partner can be a co-applicant. 


Knowing your client documents (KYC)is a process of relating and vindicating the identity of the borrower. This is an obligatory process as per the accreditation from RBI. Age, Address, hand, and print identity need to be vindicated based on specifically approved documents. 

Fiscal Documents

Fiscal documents, or financial documents, are records and papers related to financial transactions, income, expenses, and taxes. These documents provide evidence of financial activities and are often required for home loans. Some of the fiscal documents include Income duty Returns( ITR), calculation of Income (COI), Profit & Loss account( P&L), Form 16, Salary instruments, Salary slips, and Banks statements. 


Collateral refers to the security the borrower offers to the bank or financial institution to secure the loan. It is the irremovable property against which the lenders offer loans. 

Principle amount

This is also known as loan quantum, which refers to the sum of money that was initially borrowed or invested. It represents the original amount of the loan or the initial investment without considering any interest or additional charges.

Interest Rate

The interest rate in a home loan is the percentage levied by the lender on the loan amount borrowed for purchasing a home or property. It represents the cost of borrowing and is typically expressed as an annual percentage.

The interest rate, in the case of a home loan, can be either fixed or variable:

  •   Fixed Interest Rate: This remains constant throughout the loan term. This means that the borrower's monthly payments and the total interest paid remain consistent and predictable.
  •   Variable Interest Rate: This is subject to change based on market conditions and fluctuations in a benchmark interest rate, like the prime rate or the lender's internal rate. As a result, the borrower's monthly payments and the total interest paid can vary over time.


These are some Home Loan Process terms that being well-versed will only accelerate your process of getting a home loan. Knowing these terminologies will help you during the home loan process, even helping you avail of a discount on the home loan processing fees.

Finance & Legal