Overview
Any amount of money borrowed from a bank or an NBFC for the purchase, expansion, or construction of a home at a certain fixed or floating rate of interest, payable in EMI or Equated Monthly Instalment over an agreed period, is termed as a Home Loan. The property remains as security with the lender for the term or period of the loan.
Types Of Home Loan
Home Loan
A Home loan happens to be the most common type of loan wherein the house is held as collateral until you repay the loan. Numerous housing finance companies and public and private banks make such offerings with a choice of repayment options.
Home Construction Loan
If you have a plot of land and lack financial support to construct a home on that piece of property, you may choose a house construction loan. Such borrowing is mainly made to construct or repair a major part of your home.
Home Extension Loan
Should you already own a home, and feel the need to extend the building, add an annexe, or build another floor, etc., Home Extension Loan is your go-to option that finances such needs.
Home Improvement Loan
All of us wish to improve and upgrade our homes for a better life. From your old-age furniture, fixtures to faulty lightning systems, Home Improvement Loan funds all your plans.
Home Loan Balance Transfer
Burdened with high-interest-rate debt on your current home loan? Home Loan Balance Transfer lets you transfer your debt to a low-interest rate charging plan to lower your burden and improve your paying capacity.
Composite Home Loan
A Composite Home Loan empowers you to purchase a plot and construct a house as well on the acquired land; both with a single loan and within a stipulated time mentioned by your Bank.
Home Conversion Loan
Should you want to move from your present dwelling place to a new dwelling due to professional or personal reasons, you may opt for a Home Conversion Loan. A home conversion loan facilitates the smooth conversion of your current loan from your old home to your new home.
Pradhan Mantri Awas Yojna
The plan of the Government of India to allow every Indian Citizen an opportunity to own a home in India via the drafting of the Credit Linked Subsidy Scheme or CLSS is known as Pradhan Mantri Awas Yojna. Under the PMAY, a citizen can avail Home Loan from almost all banks allied with this scheme.
NRI Home Loan
If you are a patriot, a Non-Resident Indian, and wish to own residential property in India, NRI Home Loan is your choice. Though the formalities for application may be a little different, you can still get a loan up to a certain percentage of your property value.
Features & Benefits
Attractive Interest Rates
Home loans are accessible at lower interest rates than other types of loans. Obtaining a home loan is better than going for any other loan type to purchase your dream property. Housing loans are offered at cheap interest rates since the lenders do not want to deal with missed EMIs and unpaid dues.
Due Diligence Of the Real Estate Property
The finest aspect about housing finance is that the bank will carry it out if you missed out to determine the property’s validity. Furthermore, while evaluating the house loan documentation, bank employees conduct legal checks to verify that the borrower is not defrauded. Due diligence evaluates areas where the bank approves the transaction and alerts you if your property purchase is risky in any aspect.
Tax Benefits With Housing Loan
People who have mortgages are eligible for income tax benefits. The deduction of income tax is a fantastic benefit of getting a property loan. It is available for interest paid on a yearly basis. The amount of interest paid is subtracted from the income tax that must be paid.
Flexible Home Loan Repayment Period
Another feature that distinguishes a home loan from other types of loans is the payback period. You can request longer payback terms whenever it is most convenient for you. One can stretch the loan repayment tenure up to 25 to 30 years. The monthly instalments decrease as the repayment period lengthens, easing the EMI burden on the borrower.
Availability of Home Loan Balance Transfer
A housing loan allows you to transfer the remaining loan balance from one lender to another. There could be a variety of reasons for this, including interest rates, service fees, an unpleasant customer experience, among others.
Capital Growth
As per real estate data, the cost of properties has been constantly rising over the last decade. According to analysts, the capital appreciation of the real estate properties is significantly greater as compared to the paid interest amount. It, therefore, serves as a lucrative opportunity for property owners as now they can sell them for a higher profit.
Eligibility Criteria
A Home Loan requires a borrower to pledge the property to be purchased as collateral. You may qualify for this type of credit by fulfilling your lender’s set eligibility criteria. The basic home loan eligibility criteria or mortgage loan eligibility criteria are as follows:
Age:
- Salaried Person – 21 years to 58 years
- Self-Employed Person – 25 years to 65 years
Income:
- Salaried Person – Minimum Rs. 10,000 per month
- Self-Employed Person – Minimum Rs. 2,00,000 per year
Employment:
- Salaried Person – Minimum 2 to 3 years of Experience in an MNC, or a Private or Public Limited Company
- Self-Employed Person – Minimum 3 years of Experience in the current field
Credit Score:
Typically, a credit score of 700 may be considered a good score for approval.
Documents Required
Documents for Identity Proof:
- PAN and Aadhar Card
- Applicant’s Passport
- Voter ID Card
- Driving Licence
Documents for Address Proof:
- Utility bills (electricity or telephone bill)
- Salary slips of the last 6 months and Form-16
- Identity proof that contains address, like Aadhaar Card Bank account statements
- Income proof and employment proof
- Bank account statements
Other Documents:
- Passport-size photographs of the applicant
- For self-employed, business continuity proof will be required (5 years)
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Steps To Acquire A Home Loan
1.
Enter your details in the Home Loan Application Form
2.
Furnish your essential documents as asked to further the process
3.
Pay Home Loan Processing Fee
4.
Your Home Loan Application & Documents will be inspected & verified
5.
Your Home Loan Application will be queued & sent for approval or sanction
6.
Your lender will visit the property you intend to purchase for a legal check
7.
After approval, your Home Loan Amount will be disbursed to your Bank Account
Loan Application Form