Bajaj Finserv Home Loan - Frequently Asked Questions

Process related

Q1. What is the Home Loan Sanctioning and Disbursement Process?
A.Once you have picked the property, you should start figuring out how to finance the House/Flat. You will need to submit these documents:

  • Application Form
  • Processing Fees
  • Documents Requirement
  • Personal Discussion
  • Investigation verification
  • Sanctioning of Loan
  • Acceptance of Loan
  • Legal / Property Assessment
  • Disbursement of Loan

You’ll need to know that a ‘sanction of loan’ and a ‘disbursement of funds’ are two entirely different entities. Here’s how you can get your loan sanctioned and disbursed, explained in a logical order:

Application form:
This is the primary document that your lender (Bajaj Finance) considers as the deciding factor in approving (or ‘sanctioning’) your loan amount. Your application form carries other documentation such as the borrower’s (your) personal information, your contact details, details of the property offered as collateral, the total cost of that property, the total loan amount required, details regarding your income, and the loan tenor requested. You’ll also need to include your processing fee cheque here.

Processing fees:
You will be given a Loan Application Form, and asked to deposit a processing fees along with filled Application form and documents.

Documents:
You’ll have to submit a set of documents (see ‘Eligibility & Documents’ page for details) depending on your loan application documents you’ve handed in.

You can take a look at the essential documents here, but note that this may change subject to your customer profile:

  • Identity proof
  • Address proof
  • Income proof
  • Proof of educational qualifications
  • Age proof
  • Employment details
  • Bank statements
  • Details about the property in case you have finalized it before hand

Discussion with the lender:
You’ll have a personal interview with a Bajaj official right after you’ve handed in all the requisite documentation. This ‘personal discussion’ will be held either in person or over the phone, depending on your customer profile.

Investigation verification
Apart from visiting you at home, officials from Bajaj Finance might choose to meet you at your workplace as well. As part of this process, they also check up on your office and home phone lines.

Loan Sanction/Loan Sanctioning Letter:
Once these processes have been successfully carried out, you are issued a ‘loan sanctioning letter’ by Bajaj Finance officials, provided you fulfil the standards they’ve set for your loan.

Your credit worthiness is arrived at based on how much you earn, how old you are, who you work for, and your CIBIL report. If you’re a self-employed individual, the same is done based on the nature of your work, your bank statements, and your CIBIL report.

Based on this information, Bajaj Finance arrives at the ‘maximum eligible’ loan amount it can sanction you, and issues a ‘sanction letter’ stating the same. Note, though, that your loan eligibility and the amount the bank finally sanctions you are not the same at all. Based on your eligibility, you can pick the loan amount. Since this letter is crucial, ensure that it’s stored in a secure location.

Your sanction letter gives you details on: The loan amount sanctioned by the lender
Interest rates (Fixed or floating and related to which reference rate e.g. Bajaj Floating rate - BFRR)

Tenure of Loan

  • EMI Amount, mode of payment (Cheque or ECS)
  • Special scheme if any available
  • Validity of the Loan sanctioning letter
  • Any other terms and conditions.

Acceptance of sanction letter:
If you satisfy all the terms and conditions set by Bajaj, you may send back your sanction letter; simply return a signed copy to Bajaj Finance.

Note: Loan sanctioning and the disbursement of funds are completely different processes.

For instance, Bajaj Finance may have sanctioned you a loan amount of Rs.3 crore, but might not disburse these funds to you because of incomplete or unacceptable documentation. While the sanction process is based on your ability to repay loans (your creditworthiness), disbursement is based on verification of the property itself, and its documentation.

Legal / property assessment: Before Bajaj Finance disburses your loan funds, you’ll need to hand in all documentation pertaining to the property, and the original payment receipts; these are stored as security for your loan. These papers will remain in possession of Bajaj Finance until you pay back the loan amount in full.The lender carries out a couple of checks with these documents.

a. Legal check:

A ‘legal check’ is carried out on the papers you submitted in order to confirm their authenticity.

b. Technical check:

Bajaj Finance then send out a professional to pay a visit to the property you’re planning on buying with the loan.
If the chosen property is under construction:

The expert checks if the stage of construction matches the description given by the builder, He also ensures the quality of construction, and the progress.

Another important aspect of this check is whether the layout of flats and property have the required government permits.
The expert also checks if the builder has all the certification in order to start construction.

Finally, he cross-checks the claimed value of the property by comparing it to prices in the neighbouring areas.

In case of ready/resale construction:
Expert checks on how well the property has been maintained, and how old it is.

He also checks the quality of construction, and takes a look at the development of the surrounding area.

Then, he checks if the builder has the certificates required to hand over possession of the flat.

The expert then verifies that there are no existing liens or mortgages on the property, and estimates its value in relation to prices in the surrounding areas.

The expert carries out these checks and verifications to protect consumer interests, and a technical inspection helps Bajaj Finance keep tabs on the progress of construction; this dictates the release of the staggered disbursements.

Disbursement of Loan:
Signing the home loan agreement: The borrower signs the home loan agreement at this stage, and hands over the originals.
Registration and signing of loan agreement: Once you are done with the above process and your property gets a nod, the registration, stamping and signing of the loan agreement is done.

Disbursement of loan: Funds are only released if all submitted documentation is found to be in order according the norms set by Bajaj Finance, the loan agreement has been executed, and original receipts of payments have been received.

Q2. What process does Bajaj Finance follow after I apply for Home Loan?
A. Once we receive the completed application form along with the necessary supporting documents, the following things happen:

First, BFL examines all the papers you’ve handed in. When these are found to be in order, you get sanctioned a certain amount, depending on factors like: the amount you’d asked for, the value of the collateral property, and your ability to repay loans (creditworthiness). If (for some reason) we decide not to sanction the loan, we’ll let you know right then,
Next, our in-house lawyers and property experts will verify the property documents. They then carry out a thorough technical examination of the property in order to evaluate it.

Upon completion of both these procedures, Bajaj Finance initiates the disbursement of your Home Loan.

Q3. Is it mandatory to have a co-applicant when applying for a Home Loan? If yes, who can be a co-applicant for my Home Loan?
A. It is not mandatory to have a co-applicant. If someone is the co-owner of the property in question, it is necessary that he/she also be the co-applicant for the Home Loan. If you are the sole owner of the property, any member of your immediate family can be your co-applicant.

Q4. How do I update my new mailing address?
A. If your new mailing address is the same for which the loan has been taken, you may change the address in either of the following ways:

By calling us on 020 3957 4151 (call charges apply) (W.e.f. 2 May 2015)

If your new mailing address is not the one for which the loan has been taken, you will need to visit us in person at your nearest branch along with an original and self-attested copy of your new address proof and photo identity. For the list of documents, we can accept for verification

Proof of new residence to be provided.

Q5. How do I update my mobile number and the email address registered under my Home Loan account?
A. You may update your mobile number and email address in either of the following ways: By calling us on 020 3957 4151 (call charges apply) (W.e.f. 2 May 2015)

Q6. Is Provisional Interest Certificate provided to the customer?
A. Provisional Interest Certificate gives the Principal and Interest breakup for the scheduled EMI for a complete Financial Year i.e. from April to March. This calculation can be used for claiming the Income tax rebates in appropriate cases under Section 80C as well as Section 24 of the Income Tax Act. The calculations are based upon Current Principal Balances, Current ROI and Current EMI along with any changes recorded in the Current Financial Year. Any change that may happen before the end of the Financial Year will alter the calculation and the figures. You can get this in the following ways-
By logging into our Customer Portal – “Experia”
Write a mail to wecare@bajajfinserv.in

Q7. Does the Income Tax certificate change when rates change?
A. The Provisional Income Tax Certificate can change under certain circumstances like change in Interest Rate. The projection is calculated on “as is” basis and does not consider any future change that may happen either on the Interest, EMI or the Principal.

RATE CHANGE & EMI RELATED

Q1. How will my Equated Monthly Installment (EMI) be calculated?
A. A. Your EMI consists of two parts—paying back the principal amount you borrowed, plus the interest rates charged ‘on’ it. Three factors come into the equation—how much you borrowed, the rate of interest, and the loan tenure.
There are ways to bring your EMI down: for one, it drops automatically if there is a drop in interest rates, or if you pay back more than you need to (called a ‘partial prepayment’).

Q2. What are my different options for making my EMI payments?
A. There are two ways of going about this:
An Electronic Clearing Service (ECS) is an easy and convenient option, available exclusively to those that have a bank account. Your EMIs get paid out automatically from your account every month, at a specified date.
With Bajaj Finance, you may also choose to hand in a fresh set of Post-Dated Cheques (PDCs) ahead of time, from any bank account. Note that this is only for those customers in non-ECS locations.
ECS is the preferred mode, as it’s faster and there are no chances of errors. Plus, there’s no hassle of replacing PDCs when the EMi changes, or when they run out.

Q3. I have availed a Home Loan from Bajaj Finance on a floating rate of interest. How will an increase in this rate of interest impact me?
A. When there’s an unexpected increase in interest rates, Bajaj Finance first attempts to make things easier on you by increasing the loan tenure—within permissible limits. If this doesn’t resolve the issue—covering interests under current EMI—we’ll need to increase the EMI.
Another solution—you can make a partial prepayment at the nearest Bajaj Finance Branch to reduce the interest amount. Alternatively, you can choose to part-prepay online via the Experia portal.

Q4. How to change the EMI payment amount?
A. You can choose to pay your EMIs by electronic methods (ECS), by handing in post-dated cheques, or through direct payments.

Going in for the ECS option, you’ll need to pay the revised amount from the subsequent month; you’ll be paying the differential amount separately, during the current month.

If you’re going with the PDCs, you’ll need to completely replace your old cheques.
No matter what your method of payment is, it goes without saying that the EMI needs to be paid before the due date.

Q5. Can the EMI be increased during the life of a loan?
A. You can choose to increase the EMI amount whenever you choose to during the loan tenure. Taking advantage of this, you can reduce the loan tenure and save a whole lot of money on the loan.

Q6. What is Pre-EMI interest?
A. Pre-EMI interest is the interest that you need to pay on amount you borrow from Bajaj Finance. Commencing from the date of each disbursement, you can pay each month, until EMI payments start.

Q7. What is Negative Amortisation?
A. Rising interest rates tend to cause a corresponding increase in the EMI. To adjust for this change in EMi, the principal component is reduced. If this scenario continues, the interest component of the EMI might become higher than the total EMI itself. This means that the Principal component (EMI - Interest component) turns negative Your remaining balance actually increased due to the negative principal component, instead of coming down with each payment.

This is commonly referred to as Negative Amortisation.
In this scenario, your loan does not get repaid—EMIs are simply not enough to include the progressively increasing interest component. Remaining unpaid, it gets tacked onto the principal amount.
Negative Amortization only stops when the rate of interest reduces again, or if you opt for part-prepayment, or pay increased EMIs.

Q8. How does any rate change impact the loan amortization schedule?
A. The rate of interest—that decides the interest component—changes when choose to get a Variable Rate Loan. When this happens, you will see one of these two changes occur:
The loan goes on beyond the original tenure when rates go up, or reduces when interest rates reduce.
The EMI amount goes up with rising rates, or comes down in the case of falling interest rates.
For the customer’s convenience, BFL tries to increase the tenure. In unavoidable cases—such as a when the property is under construction—we have no choice but to resort to a forced increase of the pre-EMI.

 

Q9. What options are available for a Negatively Amortising Loan?
A. BFL doesn’t normally allow such loans. If the EMI does fall below the monthly interest component, we let you know you immediately, and let you:

Alter your EMI to conform with your loan’s remaining tenure
Choose to go for a part prepayment of the principal amount
Use a combination of these two methods, according to your preference
The first option here is the default option, but BFL lets you pick any of the 3.

Q10. Is there any early warning mechanism before Negative Amortization?
A.In a bid to ensure that variable interest rates do not cause you problems, we send warnings to customers when the interest component exceeds 85% of the EMI.

Q11. On what basis does the internal FRR change?
A. Internal FRR is the benchmark reference rate. This is determined basis the market conditions and the cost of funds for the company. These changes depend on various external factors and economic conditions.

Q12. How often do Interest rates change?
A. We take a look at the interest rates once every 2 months in accordance with our re-pricing policy; this is when we decide whether a change in interest rates is warranted.

Q13. Does Bajaj Finance provide any Moratorium Period?
A. At BFL, we give new customers a 3-month ‘repricing holiday,’ where we only start re-pricing starts after 3 months from the time you booked the loan.
We suggest re-pricing in the 3rd month, and carry it out in the 4th month from the date of loan disbursement.

Q14. Does Bajaj Finance Pro-actively do downward Re-pricing?
A. Twice each year, we do re-price your interest in order to bring it to within 100bps of the last 3 months’ average sourcing rate. We take pride in the fact that this is an industry first!

PAYMENT RELATED

Q1. What is Part Disbursement?
A. When we disburse funds for a property under construction, we do so in instalments. This is a part (or) subsequent disbursement.

Q2. How much time does Bajaj Finance require to make the part disbursement?
A. This depends on the category of your property—whether it’s an APF (Approved Project Facility) or non-APF.
The first category usually commands a time limit of 4 working days, while the second entails 7 working days.

Q3. How do I take my next disbursement?
A. You will need to submit online request for part disbursement along with following documents.
Scan of Demand letter from the builder
Receipts of last payment made to the developer

Q4. How do I submit a fresh set of post-dated EMI cheques?
A. Please submit your fresh set of post-dated cheques at your nearest Bajaj Finance Branch.

Q5. Can I do Part-prepayment for my Home Loan?
A. Yes, you may, and at no extra charges.

Q6. Is there a minimum amount for part-prepayment?
A. You can do part-prepayment at any time post clearance of your first EMI with a minimum amount equivalent to three times your monthly EMI. Example; in case your monthly EMI is Rs.1 lakh, then minimum amount of Part-prepayment allowed is Rs.3 lakh.

ELIGIBITY RELATED

Q1. How do you determine my eligibility for a loan and the loan amount?
A. Your loan eligibility is determined by certain deciding factors

  • Age
  • Income
  • Valuation of Property (Fair market value)
  • Existing obligations, if any
  • Stability/Continuity of employment/Business

Q2. Can I get approval for home loan without finalizing on my property?
A. Yes, based on your income eligibility, we can offer you an in-principle approval for your Home Loan. Based on this, you can identify the property you need to buy. The final sanction of your Home Loan will be based on the assessment of the identified property.

Q3. What is the maximum tenor that I can get for my Home Loan?
A. We offer a maximum repayment tenor of up to 20 years for Self Employed customers and up to 25 years for salaried customers.

Q4. What is the maximum amount I can get as Home Loan from Bajaj Finance Limited?
A. We offer up to Rs.15 crore as Home Loan for self-employed customers and up to Rs.10 crore for Salaried customers.

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