What is a Home Loan?-Banner_WC
The high cost of real estate in India means that to be a homeowner, you usually have to avail of a Home Loan. But what is a Home Loan? It is a loan you take to purchase a residential or commercial property.
When you avail of a Home Loan, you mortgage your property to your lender. Each month, you then repay a portion of the principal amount, along with the interest, through EMIs. Both the interest and principal components qualify for a tax deduction.
Before you avail of a Home Loan, find out what are the types of housing loans available to you.
Home Purchase Loan:To buy a new or second-hand home
House Expansion/Extension Loan:To enhance the current structure
Home Improvement Loan:To renovate, remodel, or repair a home
Home Conversion Loan:To finance a new home rather than the old one, which the housing loan was initially taken for
Home Loan Balance Transfer:Used to switch a Home Loan from one lender to another
Top-up Loan:Availed of over and above a Home Loan Balance Transfer to get an additional amount separate from the outstanding Home Loan amount to meet a variety of needs
Joint Home Loan:Taken by two or more individuals
The ideal Home Loan for you depends on your needs. Since different types of Home Loans are customised for different purposes, it is important you apply for one that best suits your requirement. Moreover, chances are that your odds of approval are higher with such a loan.
Do note that some of the loan’s features depend on the Home Loan guidelines and regulations set by the RBI. An example is the maximum capping on the loan-to-value ratio of a Home Loan at 75% to 90% of the property value, which is set by the RBI.
Before you proceed to apply, it is advisable to check your eligibility. Use our Home Loan Eligibility Calculator to check your eligibility.
Lastly, keep in mind that there are mainly 2 types of home loans, when divided as per interest rate:
- Fixed-Rate Home Loan: Allows you to lock-in at a given interest rate (either for the whole tenor, or till a reset date)
- Floating-Rate Home Loan: Allows you to benefit when the interest rate dips. However, the interest may also increase due to market conditions.
Also Read: What is a Joint Home Loan?
*Terms and conditions apply
Appreciation of Property Value:
In India, prices of real estate tend to appreciate over time. Opting for a home Loan to purchase a property can be a smart investment in the long run. As the real estate value in the region increases over time, so does your property’s worth.
Competitive Rate of Interest:
Usually, Home Loan interest rates are lower compared to other types of loans, making it one of the most affordable loan options for borrowers.
Owning a Home:
Owning a house is a dream for many. A Home Loan makes your dream of owning a house achievable. Furthermore, lenders these days offer competitive rates making EMIs more affordable than before.
Nowadays, lending institutions are offering flexible repayment options like longer tenure, and lower interest rates making the EMIs more affordable. Hence, borrowers can conveniently pay off the Home Loan EMIs without feeling the debt burden.
Additional Funding Through Top-up Loans
An existing Home Loan borrower can avail a Top-up Loan if they have paid a certain number of EMIs. You can use this loan for various purposes as well like starting a business, funding your child’s education, etc. Sometimes, it can act as additional financial support for long-term goals.
Listed below are the documents required for availing a Home Loan in India.
- Identity proof: Passport, Aadhaar card, driving license, voter ID (any one of these)
- Proof of Income: Salary slips, bank account statement, IT returns, TDS certificate (Form 16)
- Address proof: Passport, Aadhaar card, utility bills, driving license, voter ID (anyone of these)
- Property Documents: All the documents associated with the property purchased like sale deed, sale agreement, possession letter, allotment letter, payment receipts, etc.
- Proof of Employment: Documents like an employee ID card, experience letter, appointment letter can act as proof of employment
- Bank Statements: Bank account statements for the last 6 to 12 months.
- Photographs: Recent passport-sized photographs of the applicant(s)
- Note that submitting a PAN card or Form 60 is mandatory.
Firstly, visit the Housing Loan application portal.
Then, fill in some of the basic details like name, contact number, income details, loan amount, etc.
Check and agree to the Terms and conditions and click on "Generate OTP".
Enter the OTP you have received and complete the application process.
For further processing, our representative will contact you within 24 hours* of receiving your Housing Loan application.
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