How Do Home Loan Works In Nepal? – Ultimate Guide

A home loan// mortgage is a loan provided by a bank to purchase a residence that may be a primary, secondary, or investment residence. Basically in a home loan, the owner of the property transfers the title to the leader on the condition that the title will be transferred back or given back to him/her once the loan amount is cleared and other required terms of the mortgage have been fulfilled.

Who Can Get Home Loan In Nepal?

Those companies or individuals who are interested to invest in Real Estate can apply for Home Loan In Nepal.

Will Bank Pay Entire Money for Your Purchased Real Estate?

To be precise, No. Banks cover a certain percentage of your land or house purchased. Some of the banks may finance 20%, while others may 80%. Moreover, some could go even up to 100% but certain criteria have to be met. For Example, Nabil Bank could finance 100 percent of your construction if you already have the land and the value of the land is pretty high.

Requirements for Home Loan in Nepal

Some of the requirements are listed below:-

• The person who takes a loan needs to have a valid income stream and should pay the amount of the loan legally.
• In case the borrower could not pay the loan back in time, the bank will be able to acquire the property and sell it.

So you should be sure to have all requirements set by the bank to get a loan. Also, get to know some of the terms that most banks require while processing your loan are:-

For Personal & Corporate

• Applicants must have a verifiable source of income and documents to prove it.
• Employees might need to verify their salary amount and slip.
• As mentioned earlier, business owners should present their company’s financial status.
• Also, the borrower’s uncommitted income should be more than 25% of the EMI.
• The applicant must be above 18 years old (in the case of personal applicants).
• Some banks might ask for the finance and salary of your family members.

For Construction or Land

Here are some of the requirements:-

• The property or construction site should be away from the high extension lines.
• Road width must not be less than 8 feet in front of the construction area.
• Besides that, the bank unofficially makes sure that the land there won’t be any government construction in the future.

So make sure that these requirements would not affect your plans or find land in such a place where this requirement meets. So that you would not face rejection by banks and you would have a better chance of getting loans from them.

What is the process of home loans in Nepal?

• After the selection of property, choose the bank which you feel is good (analyzing its interest rates).
• The next step is to tell the bank about your requirements.
• The bank you selected will send a property evaluator to your location (where the property is located) to do a proper study regarding your land or home’s current price and its expected growth rate.
• Next, you need to pay some amount upfront, the money depends on the amount of loan that you have applied for.
• Also, the bank will make sure that you use those amounts to invest/buy real estate.
• If all thing goes right, you will be able to receive that loan and you will need to pay EMI on time afterward.

Documents required for a home loan in Nepal

Here is the list of documents required to take a home loan in Nepal:-

• Passport Size Photo Of Applicants.
• Citizenship Copy (Borrowers)
• Copy of Lal Purja (i.e. Land Ownership document)
• Copy of Rajinama (Transfer deed)
• Char Killa
• Blueprint of land
• Building construction approval from Municipality or VDC including drawing plans
• Land Revenue Tax Receipt/ Malpot Receipt
• If you want to purchase a house, a building completion certificate is required from VDC or Municipality.
• Map of Location
• If you buy assets from the company, you must show the company registration certificate including PAN. A clear view of the use of the real estate. Moreover, they analyze the financial performance of the company.
• Besides this, salaried person should present their salary letters, audits, and so on.

What Is Tenure For Home Loan In Nepal?

Tenure from home loan varies from 15 – 50 years in Nepal. Most banks provide tenure of 15-20 years. However, some bank exists which provides loan for 50 years (i.e. NIC Asia). You should choose the time frame which is best for you but remember if you select a longer span of time the more interest is to be paid to the bank.

Which bank is suitable for a home loan in Nepal?

Lots of banks are providing home loans in Nepal. Some of them are financing only 50%, but some of them are financing even up to 100% (But have some criteria). Here is the list of the banks providing home loans at the best rates:-

• Nepal Investment Bank Home Loan
• Nepal Bank Limited Home Loan
• Mega Bank Home Loan
• Nabil Bank Housing Loan
• Bank Of Kathamandu Home Loan
• Laxmi Bank Home Loan
• Everest Bank Limited Home Loan
• Prime Commercial Bank Home Loan
• Standard Chartered Bank of Nepal Mortgage Loan
• NIC Asia Bank Home Loan

How much loan can I get for a house in Nepal?

It depends on various factors including the bank you choose, the location of your site, and so on. For Example, Nabil Bank is providing Land purchase loans up to NPR 50 million, up to 35 years. It goes the same for Land and Building purchases.