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Home Loan Interview Questions & Answers - Learning Mode

Home Loan Interview Questions & Answers - Learning Mode

Home Loan is offered to individuals who wish to purchase or construct a house. The property is mortgaged to the lender as a security till the repayment of the loan. The bank or financial institution will hold the title or deed to the property till the loan has been paid back with the interest due for it. Home loan eligibility is determined by various factors such as income, employment status, tenure and so on. Home Loan is a sum of money borrowed from a financial institution or bank to purchase a house. Home loans consist of an adjustable or fixed interest rate and payment terms.

Try Home Loan Interview Questions & Answers - Exam Mode

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Home Loan Interview Questions & Answers - Learning Mode
Try Home Loan Interview Questions & Answers - Exam Mode
Question: Once I have closed my home loan, how do I check if my CIBIl score has been updated?

Answer: After closing your home loan or any loan for that matter, request your bank to inform CIBIL about your successful loan closure. The bank usually informs CIBIL once a month for all loan closures. The bank will inform you once they have shared the details with CIBIL and you can check your credit score to confirm. Any improvement in your credit score is a reflection that the bank has shared your successful loan closure details with the CIBIL. Source:
Question: I am planning to stand guarantor for my nephew?s home loan but i find some clauses really one sided and unfair. Can i bargain with the bank?

Answer: If you find any clause of the bank unacceptable, talk with the bank and the borrowers before signing the guarantor agreement with the bank. Yes you can discuss the clauses you find unfair with the bank. Sign up as a guarantor only after you are fully convinced and after seeking legal advice.

Hope you are aware that any default on the loan on which you stand as a guarantor will reflect in your credit score poorly. Source:
Question: Who decides the maximum LTV for home loan? The bank or RBI?

Answer: Banks decide the maximum LTV they will offer to a loan applicant as per the RBI guidelines. As the current RBI guidelines for LTV on home loans, the LTV ceilings are divided as per the quantum of home loan sought. If the cost of the property is between 0 to Rs. 30 Lakhs the maximum stipulated LTV is 90%, the LTV for property prices between Rs. 30 Lakhs to Rs. 75 Lakhs is 80% and for property prices higher than Rs. 75 Lakhs you can get a maximum LTV of 75%. Source:
Question: Do top up loans come with any tax deductions?

Answer: You will get a tax advantage for a top up loan only if you use the loan amount exclusively for repair, renovation and construction activity of the home. Under section 24 of the income tax act, top up home loans are liable for tax benefits on interest paid during the financial year and not on the principal amount. You do not get a tax benefit if you use funds from a top up loan for any other use. Source:
Question: Why is it a disadvantage to go for a home loan after 50?

Answer: When you opt for a home loan after you have crossed 50 years, you may only get a shorted tenure as banks are reluctant to offer loan where the tenure ranges into an age where the borrower is not working. So if at 50 you opt for a home loan, the maximum loan tenure you may possibly get is between 10 to 15 years at best or even lower. Source:
Question: If the home loan is rejected due to any reason, is the processing fee refunded?

Answer: Unless otherwise specified in writing the processing fee charged by banks for home loan is usually non refundable. Even if your loan application does not go through the approval process, the loan processing fee which is usually between 0.25 to 1% of the loan amount is non refundable. If your bank promises a refund of loan processing fee in case of loan rejection, make sure to take it in writing from the bank concerned. Source:
Question: What?s the reasoning behind banks charging a legal fee for home loans?

Answer: Once you submit your property documents with the bank, the bank has to undergo a process to get the documents verify legally. Banks have a team of legal experts who verify the submitted documents for each loan applicant. A lawyer usually checks the past record of the property and whether all submitted documents are correct or not to rule out any fraud. Since banks need to pay the legal team for their efforts, they charge a legal fee from the loan applicant. In case you are seeking a property whi Source:
Question: I have a slightly lower credit score. I need to opt for a home loan. Does reducing my LTV increase my loan chances?

Answer: When you have a low credit score, banks will generally offer you a lower quantum of loan compared to someone with a healthy credit score. So for example if you are looking for a home loan, someone with a credit score of 750 plus may get up 80-90% LTV, while you may at best get only 60-65% LTV for the loan. Source:
Question: Do bank home loans cover the cost of expenses like stamp duty and registration charges?

Answer: Banks usually do not take into account the money spent for any statutory expense like stamp duty or registration charges, any VAT or service tax. Banks provide loans only up to 80-85% of the total cost of the property only and as per the agreement / market value, and this is excluding stamp duty and registration charges.

Although some public sector banks offer certain schemes from time to time supporting such a facility for a limited number of people like government employees, professiona Source:
Question: Does home loan with overdraft facility helps in reducing the loan tenure?

Answer: Yes. A home loan with overdraft facility can lower your monthly EMI or loan tenure. Unlike a normal home loan where any partial prepayment of funds done by you gives you the chance of reducing your loan tenure, with a home loan with overdraft facility you can also manage the reduction of interest outgo from your loan repayment. The lump sum of money ( anything in addition to the EMI) you have parked in the associated overdraft account of the home loan is treated as payment towards your home loan Source:
Question: For a home loan transfer do I first take NOC from existing bank or first apply for the loan with the new bank?

Answer: If you are certain that you need to opt for a home loan transfer, you need to submit a letter of request with your current bank. As per your request the bank will offer you its consent letter, known as a NOC. Only once you have the consent letter or NOC, you can apply for a loan with your new preferred bank with your income documents and copies of property documents. Source:
Question: What is the validity period of a pre approved home loan?

Answer: Usually pre approved home loans come with a validity period ranging from 2 months to 6 months depending on the bank concerned. This means once your pre approved home loan is approved you must shortlist your property within that time period and apply for a loan. Remember a pre approved loan does not come with a guarantee that you will get a home loan when you apply for one. Also if there is any change of interest rate during this period like changes in bank base rate it may impact the final loan Source:
Question: Why do banks put a home loan lien for housing loans?

Answer: Banks usually put a lien on your property when you opt for a housing loan. The lien works just like automobile loans where you cannot sell off your vehicle till the loan is not repaid. Similarly you will not be allowed to sell off your property till you repay the loan. Once you repay your home loan you will need to approach the local registrar in your city and get the lien removed. You will need to submit the bank NOC with the local registrar to get the lien removed against your property. Source:
Question: When is the right time to opt for a home loan refinance?

Answer: Usually most people opt for home loan refinance when their interest rate is way too higher than the existing rate of interest. So you may be either be changing from one bank to another or switching from fixed to floating. Home loan is a long term product with a long tenure. There are bound to be interest rate fluctuations along the way. Unless the interest rates drop more than 0.75 to 1% from your prevailing interest rate, even considering a home loan refinance is a big no. Source:
Question: Can i get a loan to raise money for a home loan down payment?

Answer: Technically yes you can get a personal loan provided your credit score is good and you can use that money for your home loan down payment but I would suggest you against such a move.

The high interest rates on loans like personal loans will only make repayment tougher with a higher chance of default. Instead if you have any investments in other financial instruments, it is a good time to consider liquidating them for your loan down payment. Source:
Question: If I take up a loan for house construction, can I expect the entire loan disbursal at the start a as a lump sum amount?

Answer: Loan disbursement in home construction loans are made in installments. Banks have their own break up of construction activity and disburse funds accordingly. For example banks may release funds towards civil work which may include foundation work to building the physical structure and not release further funds till the process is completed. Also since home construction loan disbursal is linked with construction activity, the loan disbursal would not happen if the work gets suspended or delayed. Source:
Question: Do joint home loan applicants get a lower interest rate compared to individual applicants?

Answer: Your bargaining capacity with the bank or the non banking financial company offering you a home loan goes high when you opt for a joint home loan. With a joint loan, the overall repayment capacity goes high allowing you to leverage it against a lower interest rate or other discounts with the banks. Banks and NBFCs are more than happy to facilitate discounted interest rates for genuine buyers with a good repayment capacity. Source:
Question: Is it good to transfer my home loan to another bank as the interest rates have reduced?

Answer: Home loan is like a long term financial obligation. Any small rise of fall in the interest rates is therefore part a home loan plan. Unless the interest rates drop more than 0.75 to 1% from your prevailing interest rate, even considering a home loan refinance is a big no. Source:
Question: My domestic help is seeking a home loan for less than 10 Lakhs. I have been told his loan can cover even the stamp duty charges. Is this correct?

Answer: Yes you have heard it right. With the government focusing its attention to promote low cost housing and affordable housing units, RBI has instructed banks to include stamp duty charges, registration charges and other associated charges in the LTV for loans up to Rs. 10 Lakhs. Punjab National Bank, Bank of Baroda and State Bank of India are some of the popular PSU banks offering loans as per new norms. Source:
Question: How do banks value an under construction property for home loan approval? How can they fix a price when the home is still under construction?

Answer: For getting the exact valuation for an under construction property bank realty experts check the quality of construction as well as layout of flats ensuring that the construction is done as per granted permissions. The property is ranked in comparison with other property options in the area and builder credibility. Source:

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