Short answer: The home loan questions that matter most are the spread over the benchmark, the reset date, every fee in the Key Facts Statement, prepayment terms, and how the loan is disbursed. The mistakes that cost most are comparing headline rates, extending tenure after every hike, and assuming the loan covers stamp duty. It doesn't.
- A 0.25-point higher rate costs about ₹2.86 lakh over 20 years on ₹75 lakh.
- Prepaying ₹5 lakh in year two saves about ₹15.6 lakh of interest and 31 months, if you keep the EMI.
- No prepayment charges on floating-rate loans to individuals for non-business purposes, for loans sanctioned or renewed from 1 Jan 2026 (RBI).
- Stamp duty and registration can't be financed on homes above ₹10 lakh (RBI).
- Our RATES check: rate and reset, all-in costs, terms, eligibility, stages.
A home loan lasts longer than most jobs. Twenty minutes of questions before you sign can save lakhs. Here's what to ask your lender in Bengaluru, and the mistakes we see most.
20 home loan questions to ask
R: Rate and reset
- What benchmark is the rate linked to, and what's the spread over it?
- Can the spread change during the loan, and on what grounds?
- When does the rate reset? RBI rules require external-benchmark rates to reset at least once every three months (RBI Master Direction).
- After a hike, will you get to choose a higher EMI, a longer tenure, or prepayment? See our repo tracker.
A: All-in costs
- What's the APR in the Key Facts Statement? New retail loans from 1 Oct 2024 must come with a KFS (RBI circular).
- What are the processing, legal, valuation and documentation fees?
- Is any insurance a condition of the loan, or optional?
- What would it cost to switch lenders later?
T: Terms
- What tenure can you get, and what's the age limit?
- Are there prepayment charges? For floating-rate loans to individuals for non-business purposes sanctioned or renewed from 1 Jan 2026, RBI bars them (RBI Directions).
- Is there a minimum part-prepayment amount or limit per year?
- When you prepay, does the bank cut the tenure or the EMI by default?
E: Eligibility
- What loan-to-value cap applies? RBI caps it at 90%, 80% or 75% depending on the loan size; see our LTV page.
- What EMI-to-income ratio does the lender use for you?
- Does a co-borrower need to be a co-owner? See our joint loan page.
- Which documents does it need, and how long is the sanction valid?
S: Stages
- For an under-construction flat, will disbursement follow construction stages?
- How many days does it take to release each stage payment? Your builder's payment plan depends on it.
- Do you pay pre-EMI or full EMI during construction?
- How and when do your original documents come back when you close the loan?
Worked examples
Worked example 1: what a quarter point costs
A ₹75,00,000 loan over 20 years.
| Rate | EMI | Total interest |
|---|---|---|
| 8.50% | ₹65,087 | ₹81,20,818 |
| 8.75% | ₹66,278 | ₹84,06,793 |
| Difference | ₹1,191 a month | ₹2,85,975 |
That's why the spread, not the advertised rate, is the number to compare. Run your own with our EMI calculator.
Worked example 2: one prepayment, kept EMI
Same loan at 8.5%. After 24 months you prepay ₹5,00,000 and keep paying ₹65,087.
| Item | Without prepayment | With ₹5 lakh prepaid |
|---|---|---|
| Months left after month 24 | 216 | 185 |
| Total interest | ₹81,20,818 | ₹65,63,627 |
| Saving | ₹15,57,191 and 31 months |
Ask the bank to cut the tenure, not the EMI, if you want the bigger saving. Keep an emergency fund before you prepay.
15 home loan mistakes to avoid
- Comparing headline rates instead of the spread and the APR.
- Not reading the Key Facts Statement before signing.
- Assuming the loan covers stamp duty. It can't on homes above ₹10 lakh (RBI Master Circular). On a ₹1 crore flat with a 75% loan, you need about ₹32.6 lakh in cash: ₹25 lakh down payment plus about ₹7.6 lakh in charges.
- Borrowing the maximum you're eligible for, not what your budget can carry. Check our EMI-to-income page.
- Extending the tenure after every hike. It's usually the costlier way to absorb one.
- Not knowing your reset date, so a rate change arrives as a surprise.
- Treating bank approval of a project as a legal check. Do your own title and RERA checks.
- Letting disbursement run ahead of construction on an under-construction flat.
- Adding a co-borrower without thinking about ownership and tax. Ask a CA.
- Assuming the tax benefit applies in your regime. The ₹2 lakh self-occupied interest deduction is old regime only; see our tax benefit page.
- Buying insurance offered with the loan without comparing it.
- Running tenure past retirement without a plan to close it earlier.
- Ignoring rent plus pre-EMI during construction; see our under-construction questions.
- Prepaying with your emergency fund.
- Not asking how original documents are returned at closure.
The RATES check (our framework)
| Letter | Covers | Questions |
|---|---|---|
| R: Rate and reset | Benchmark, spread, reset, hike options | 1 to 4 |
| A: All-in costs | APR, fees, insurance, switching | 5 to 8 |
| T: Terms | Tenure, prepayment | 9 to 12 |
| E: Eligibility | LTV, income ratio, co-borrower, documents | 13 to 16 |
| S: Stages | Disbursement, pre-EMI, documents back | 17 to 20 |
Before you sign the sanction letter
- [ ] Spread and benchmark in writing
- [ ] Reset date known
- [ ] KFS read, APR noted
- [ ] All fees listed
- [ ] Prepayment terms confirmed
- [ ] Cash for down payment and charges ready
- [ ] Disbursement tied to construction stages
- [ ] Tax position checked with a CA
CA note
Tax deductions, co-borrower claims and the regime choice depend on your facts. Ask a CA before you decide.
Frequently asked questions
The benchmark and spread, the reset date, the APR and fees in the Key Facts Statement, prepayment terms, LTV, and how disbursement works for your flat.
The margin the lender adds to the benchmark, such as the repo rate. Two loans on the same benchmark can differ only by spread, so compare it directly.
For floating-rate loans to individuals for non-business purposes, sanctioned or renewed from 1 Jan 2026, RBI bars prepayment charges. Check your sanction letter and KFS.
No, for homes above ₹10 lakh. RBI excludes stamp duty and registration from the property cost used for the loan, so plan to pay them in cash.
At least once every three months for loans linked to an external benchmark, under RBI rules. Your sanction letter gives the reset dates.
Raising the EMI is usually cheaper over the loan's life. Extend the tenure only if your budget can't take the higher EMI.
A standard summary of the loan's costs and terms, including the APR. RBI requires it for new retail loans sanctioned from 1 Oct 2024.
Often, if you have an emergency fund first. In our example, ₹5 lakh prepaid in year two saved about ₹15.6 lakh of interest.
Sources
Checked 19 Oct 2026.
- RBI, Master Direction, Interest Rate on Advances (external benchmark, reset): https://www.rbi.org.in/SCRIPTs/BS_ViewMasDirections.aspx?id=10295
- RBI, Key Facts Statement for Loans and Advances, 15 Apr 2024: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12663
- RBI, Pre-payment Charges on Loans Directions 2025, 2 Jul 2025: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12878
- RBI, Master Circular, Housing Finance (LTV, stamp duty exclusion): https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=12824
- RBI, FAQs on reset of floating interest rate on EMI-based personal loans: https://www.rbi.org.in/commonman/Upload/English/FAQs/PDFs/FAQRFIR10012025.pdf
- RBI, Monetary Policy Statement, 7 Oct 2026 (repo 5.50%): https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=63742
