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How Does a Home Loan Work in India?

How Does a Home Loan Work in India?

With the rising cost of real estate across almost all cities in the country, several prospective homebuyers rely on home loan to fund the purchase. This provision allows you to access a large amount of funds to facilitate the purchase of your dream home. Additionally, it comes with a lengthy repayment period and benefits too.

To learn more about how home loans work in India, read on.  

What is the Must Know Information About a Home Loan in India?

  • Purpose of a Home Loan: An individual generally considers taking a home loan for purchase, renovation, or construction of a property.
  • Eligibility Criteria: An applicant’s eligibility is based on the property in question and the applicant’s financial profile.
  • Type of Projects Approved for a Loan: Home projects are categorised as subvention schemes, time linked plans, or construction linked plans (CLP). Some lenders will only fund CLP projects so it is best to identify the same beforehand.
  • Applicable Tenor: A loan for a house purchase usually comes with a repayment period of up to 30 years.
  • Prepayment Guidelines: The RBI has not permitted lenders to levy prepayment penalty on home loans with floating interest rates.

How a Home Loan Work in India

Considering a financing option from a lender is a big decision; thus, it is in your best interest to know how a home loan works. To offer insight, here are a few things to keep in mind before availing the loan.

  • Search for home loan offers in the market, especially considering the processing fees and other fees and charges
  • Gather all the necessary property-related documentation.
  • Understand the difference between a fixed and floating home loan interest rate.
  • Consider the EMIs and applicable interest rates. A quick way to do this is by using the Home Loan EMI calculator.
  • Identify the ideal loan terms before you apply and prepare to negotiate for better terms.

This is a brief overview of how a home loan works in India. For many, this is a once-in-a-lifetime investment, and it helps to be prepared for the processes involved.

Now that you have a better understanding of home loans, how they work and the steps to keep in mind before you apply, comfortably opt for Bajaj Housing Finance Home loan. The loan comes with several advantages including a repayment period of 30 years based on your eligibility. For a hassle-free experience and quick loan approval, apply online by sharing your basic details.