Do you need a guarantor to get a home loan?

Updated: May 21, 2019 7:42:03 AM

The credit rating depends on the ‘regular repayment’ and no defaults. It does not mean that you have to repay all your loans to get a fresh loan.

To get a home loan, you do not need a guarantorTo get a home loan, you do not need a guarantor

By Chaitali Dutta

I am applying for a home loan. Since I do not know any one in Indore, how would I get a guarantor for the loan?
– Jitender Verma
The home loan typically does not require any guarantor. Please approach a scheduled bank for the loan.

What is reducing balance and how do banks calculate interest rate on it?
—Deepak Kumar
When we take the loan from a bank the interest payable over the whole period of the loan plus the principal amount is divided in such a way so that we have a constant amount to repay to the bank, which we know as EMI. Each EMI is part interest on the loan outstanding and remaining part is the reduction in principal. The term ‘reducing balance’ refers to this principal amount outstanding, every month, which you have been repaying as a small amount every month. The interest payable is nothing but the interest on the daily reducing balance of the loan @ interest rate.

I prepaid my home loan amount three months back. Now the NBFC says I have to pay a penalty of 2% of the outstanding amount for prepaying the loan and it is not releasing my registration papers? What should I do?
—Gaurav Sharma
Please check the sanction letter carefully and look for the clause of prepayment of the loan. If a penalty of 2% is mentioned there, you need to pay. If no penalty clause is clearly stated, you have to write to the NBFC saying that the condition it is imposing is illegal.

If I clear all my outstanding loans, will I have a better chance to get a housing loan from a government bank?
—P S Sunder
The credit rating depends on the ‘regular repayment’ and no defaults. It does not mean that you have to repay all your loans to get a fresh loan.

I had taken a home loan for 20 years five years ago. Now, I am going abroad for at least five years. How can I continue the loan amount?
—Amit Singh
The loan amount and other covenants remain the same. They will now map you as an NRI and your deposit account as well as loan account will be re-designated as NRE/ NRO and NRI home loan accoount. You need to remit funds from abroad into your NRE account and then the EMI will be debited from this NRE deposit account.

The writer is founder, AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to fepersonalfinance@expressindia.com

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