We assist you in acquiring the right kind of funding required to purchase a new property through our expert banking partners who guide you with all the necessary documentation and stages involved in the loan sanctioning process. Home loan is a loan disbursed by a bank or financial institution (lender) to an individual to for buying residential property. Here, the lender holds the title of property until the loan is paid back in full along with interest. It is generally for a longer tenure of somewhere between 5 and 30 years as the amount is of higher value which takes time to get repaid.
Here in India, buying a new home always ranks at the top among the most important things that people ever wish for. However, buying a new home is no more a dream for an average-income Indian today – thanks to a vide range of available home loans!
Types of Home Loans:
If you want to invest in your property or house, there is a multitude of home loan choices available for a wide range of purposes, from purchase to construction to renovation. The housing finance institutions in India now offer different choices to people while shopping for the best home loan in India:
- Home Purchase Loans: These are the standard forms of loans available for buying a new home in India.
- Land Purchase Loans: Such types of loans are available for purchasing a land for both investment or construction purposes.
- Home Construction Loans: These types of home loans are available for constructing a new home.
- Home Improvement Loans: Such home loans are offered for important home improvement requirements such as repair works, renovations, or healing an already-purchased home.
- Home Conversion Loans: This special type of loan is offered to individuals who have an existing home loan, and wishes to buy and move to another home, for which additional funds are necessary. With such loan, you can transfer the existing home loan into a new loan amount that includes the extra fund required and eliminates the pre-payment amounts for the previous loan.
- Home Extension Loans: If you wish to extend or expand your existing home, this is the best home loan for you.
- Bridge Loans: Such loans are available for people who want to sell their existing home and buy a new one. The bridge loan offered by home loan banks will finance your new home unless you find a buyer for the previous one.
What is the eligibility criteria for a home loan?
Anyone – whether self employed or salaried professionals – with a regular source of income can apply for home loans. One must be 21 years old when the loan period begins and should not exceed an age of 65 years when the loan period closes.
How to determine eligibility?
Once repayment capacity determines your eligibility to apply for home loan, lender considers the following factors
- Income (savings history)
- Age proof
- Qualification (stability and continuity occupation)
- Resident status (maximum limit for an Indian resident is Rs.5000000)
- Spouse’s income
- No. of dependants
- Credit history (history of past repayment)
- Existing loan statuses
What is floating rate home loan?
If the interest rate on the loan varies during the loan period then it is called floating rate home loan. Here the loan rate can vary during the repayment tenure. Lenders have their own benchmark rate, which determines the floating rate.
What is a fixed rate home loan?
Fixed rate home loan are at a predetermined interest rate during the loan period, irrespective of market conditions.
For instance if the RBI has increased loan rates, then people with fixed rate home loan will not have to suffer any increase in the amount of EMI being paid for the particular loan.
How to repay my loan?
There are different ways to pay for your loan, i.e.: issuing post-dated cheques for the whole tenure of the loan; getting the amount deducted from the salary; or by issuing standard instructions to the lender for ECS (Electronic Clearing System) wherein the EMI is automatically deducted from the bank.
Is prepayment of loan allowed?
Yes, one can repay the loan amount before the scheduled date by making a lump sum payment. In such cases, bank might apply some penalties in the range 2-3% of the principal amount outstanding. The penalties are never fixed; rather it largely depends on the reasons and source of funds. Many banks or financial companies do not charge any penalty on your deposited amount if the EMIs are paid periodically.
What are the other charges included in the home loan process?
Processing Fee- When applying for a loan, a fee is paid to the lender known as processing fee. The amount paid could be either a percentage of the loan amount or a fixed amount that is not being linked to the loan.
Commitment Fee- It is essential to avail the loan within a stipulated time period after it is processed and sanctioned as some financial institutions might levy a commitment fee.
Pre-payment Charge- Banks/ financial institutions might charge a penalty if the full loan amount is paid before the stipulated time. The penalty amount could be a maximum of 5% of the amount pre-paid.
Miscellaneous charges- Documentation and consultant charges are generally considered as miscellaneous charges by few lenders.