What a home loan covers
A home loan is a long-term secured loan to buy, build or improve a residential property, with the property mortgaged to the lender until you repay. Under the home loan umbrella, lenders offer:
- Purchase loans for ready or under-construction flats and houses
- Plot loans for residential plots, often combined with a construction loan
- Self-construction loans for building on land you already own
- Home improvement and extension loans for renovation or adding a floor
Banks, housing finance companies and NBFCs all lend for housing, and their eligibility rules, fees and processing speed vary widely. Ramasure compares offers from 40+ banks and NBFCs so you see the full picture, not one lender's view.
How much you can borrow: RBI's LTV limits
RBI caps the share of a property's value that a lender can finance:
| Loan amount | Maximum loan-to-value |
|---|---|
| Up to ₹30 lakh | 90% |
| ₹30 lakh to ₹75 lakh | 80% |
| Above ₹75 lakh | 75% |
Illustrative: on a flat valued at ₹60 lakh, the loan can be at most ₹48 lakh (80%). You arrange the remaining ₹12 lakh, plus stamp duty, registration and interiors, which are usually not counted in the property value for LTV.
Lenders may fund less than the cap because of your income, the property's condition or their own policies. What you finally get is the lower of the two limits.
Under-construction homes and self-construction
When the house isn't ready, the lender releases money in tranches linked to progress, usually against the builder's demand letter and its own site inspection. For builder projects, confirm the project is registered with the state RERA authority (MP RERA for Indore and the rest of Madhya Pradesh) and check whether the lender has already approved the project, which usually speeds up processing.
For self-construction, lenders typically ask for the sanctioned plan, a cost estimate from an engineer or architect, and photographs or site visits before each tranche.
Things to compare before you choose
- Rate type and benchmark. Floating rates move with the lender's benchmark, so understand how often your rate resets.
- All-in cost. Compare processing fees, legal and valuation charges and the APR in the Key Fact Statement, not just the headline rate.
- Tenure. A longer tenure lowers the EMI but raises the total interest.
- Service. Look at turnaround for tranches, the part-payment process and how quickly original documents come back after closure.
