In this post, let’s look at New Home Loan product from DHFL (Dewan Housing Finance Limited). At the outset, I must concede that there is nothing special about this product. It is a plain vanilla home loan product. As simple as it gets. There is no fancy feature in this product that requires a deeper look. We have reviewed many such fancy products from banks in our earlier posts. However, if you are planning to apply for a home loan, it is always better to have options. Let’s find out more about DHFL New Home Loan product.
Who Can Apply?
- You must be at least 21 years of age at the time of making the loan application.
- Maximum age at loan maturity: 65 years (there’s some conflicting information on their website)
- Have a source of income (either salaried or self-employed)
How Much Loan Can I Get?
For loans up to Rs 30 lacs, you can get a home loan up to 90% of the cost of the property. For loans above Rs 30 lacs, loan-to-value will be decided as per DHFL norms and guidelines. I could not find anything about LTV on DHFL websites. However, it could be between 75 to 80% of the overall cost.
Cost of the property is one part. Your loan repayment ability will also determine your loan eligibility. Your loan eligibility depends on your income and existing loan obligations. An earning co-applicant can increase your loan eligibility.
What Is the Loan Tenure?
The maximum loan tenure is 30 years. At the same time, the loan tenure won’t extend beyond your retirement age or 60 years, whichever is earlier. This is for a salaried loan applicant. For a self-employed person, the maximum age at loan maturity is 70 years.
What Is the Rate of Interest for DHFL New Home Loan? What Are the Other Charges?
The loan interest rates will keep fluctuating. The interest rate depends on the nature of your occupation (salaried or self-employed) and the loan amount. DHFL calculates EMIs on monthly reducing balance basis. Other charges include processing fee, valuation charges, technical charges etc. You can check out the latest list of rates and charges on DHFL website.
Are the Tax Benefits Any Different?
DHFL is a housing finance company (HFC). From the perspective of income tax laws, a home loan from an HFC will fetch you the same tax benefits as a home loan from a bank. You can get benefit of up to Rs 1.5 lacs for principal repayment under Section 80C and up to Rs 2 lacs for interest payment on a housing loan.
What Will Be the Security for the Loan?
The property to be purchased from the loan proceeds will be mortgaged to the lender. In some cases, DHFL may ask for additional security such as life insurance policies, FD receipts etc. There is no need for a Loan Guarantor (or so DHFL says on their website).
How Long Does It Take for Home Loan Disbursement?
I would expect HFCs to be operationally nimble as compared to banks in disbursing loans. Since a loan is a commodity product, this may help an HFC to stand out from the competiton. DHFL website mentions 3-15 days once they have received the requisite documents.
What Are the Documents Needed to Apply for DHFL New Home Loan?
You will need to provide your KYC, income related and property documents.
Under Income related documents, a salaried applicant can provide salary slips and copy of bank account statement for the past 3 months. A self-employed person will have to provide copies of income tax returns, GST returns, balance sheet and copies of bank account statements.
Please understand that I am presenting the information from their website. The exact set of documents required to establish income may be different, especially for self-employed.
A Few Things to Guard Against
There is nothing wrong in this home loan product or with DHFL. However, if you are planning to apply for a loan from DHFL, do compare against the rates that you may get from other banks or HFCs. Additionally, you need to guard against any sale of third-party products. At the time of loan sanction, you may be asked to purchase insurance of one type or the other (Home loan protection products). While I am not saying that you must not purchase insurance, you must also appreciate the cost and the suitability of the product. Not only that such insurance plans can be very expensive but such plans may also not provide you the right kind of coverage. I discussed a real life example in this post. Frankly, some of these insurance products are outright non-sense. Take necessary steps to avoid being victim of mis-selling. Do note that it is not that you have to be more cautious while availing loans from housing finance companies. Mis-selling of such products happens at banks too.