After all, purchasing a home is a big financial decision. With the rates of real estate touching sky high, it becomes difficult to purchase a home merely with our savings. This is when home loans come to our rescue.
Home loans are a long-term financial commitment and, therefore the interest rate offered will make a huge difference with regards to the payout over the long run. The interest rates on home loans not only factor in the lenders own cost of funds, but also the ‘risk’ associated with the applicants. In short, lenders offer home loans at a lower interest rate to individuals with a good credit profile. Applicants with a poor credit history are charged a higher rate of interest on the home loans. Women applicants are provided discounted interest rates by most of the banks.
The fixed rate of interest denotes that the rate of Interest will remain same throughout the tenure of the loan irrespective of the market conditions. A fixed rate of interest provides certainty, but they could be expensive. People who are good at budgeting should opt for a fixed home loan interest rate. This type of home loan interest rate will also offer security as well as certainty in case of long term planning.
The floating Home Loan interest rate is beneficial since it offers a lower interest rate than the fixed interest rate. In case of floating interest rate, the rate is adjusted based on the market conditions, and such readjustments can happen many times during the tenure of the loan. The change in interest rates can be adjusted either by changing the EMI amount or the tenure of the loan. For example, if the interest rate is reduced, you can either reduce your EMI or the tenure.
Mentioned below is the step-by-step procedure to apply for car loan offline:
Step 1: Fill in the home loan application form & then attach the required documents
Step 2: Payment of the processing fee
Step 3: Discuss the details with the bank
Step 4: Get all your documents validated
Step 5: Next comes the home loan approval procedure
Step 6: Processing of the offer letter
Step 7: Processing the papers of the property which will be followed by a legal Check
Step 8: Getting a technical check done for the estimation of the site
Step 9: The last step of the home loan procedure involves about the final loan deal, getting the agreement signed and then getting the home loan disbursed.
The full form of EMI is Equated Monthly Installment. It comprises of the repayment of the principal amount as well as the interest payment on the amount that is outstanding of your home loan. Your EMI reduces with a longer loan tenure. Here, longer indicates 30 years.
Home loan EMI calculators will give you a fair understanding about the ratio of the principal amount to the amount of the interest due, depending on the effect of the tenure as well as the interest rates. Home loan EMI calculator will also offer an amortization table which will elucidate the repayment schedule. With the help of the Home loan EMI calculator, you will get a complete break-up of the amount of the principal as well as the interest.
Mentioned below are the features of a Home loan:
Mentioned below is the list of documentation that is needed for application of Car loan:
Valid identity proof:
Valid address proof:
Listed below are some of the benefits of home loan:
1. Sense of pride and accomplishment
Purchasing a home on your own holds a sentimental value since it is one of the biggest financial investments. The total value of the home that we invest in is thereby making it the most important as well as the biggest component of our investment portfolio!
2. Capital Appreciation
Investing is a property leads to capital appreciation. This is one of the strongest reasons for applying for a home loan. Even if you buy a house by applying a home loan and then rent out the same, you would certainly benefit due to rate of inflation. In short, purchasing a home would also give you a protection and security from the rising inflation in the long run.
3. Low interest rate
Investing in a home is a decision which is long-term. Gone are the days when housing loan or home loan used to be available for a term of 10 years to 20 years. Today, certain banks offer home loan for a term as long as 27 years. There are chances that with low interest rate, you too may benefit at certain point in your home loan payment cycle.
There also would be times when the home loan interest rate may fall drastically, thereby making it easier for you to prepay the home loan amount.
4. Tax Benefit for the Interest paid
According to Section 24(b) of the Income Tax Act, 1961 you are allowed a deduction of up to Rs. 2 lakh a year for interest payable against your home loan for a fully constructed house/flat.
The interest that is payable for the pre-construction or the pre-acquisition period will be deductible in 5 equal annual instalments that would begin from the year in which the house has been either constructed or acquired.
5. Tax Benefit for the Principal Repayment
The repayment of the principal amount of up to Rs. 1.5 lakh on your home loan would be allowed as a deduction from the gross total income under Section 80C of the Income Tax Act.
A loan disbursement is done based on the construction stage of the property of the house. If the property is of resale or it’s a ready property, the loan disbursement will be done in full. In short, the bank or the home loan lender will deliver the entire or complete payments to the recipient through a cheque.
When you invest in a property which is ‘under construction’, the bank will make the payment in parts which is termed as ‘part disbursement’. However, whenever a part disbursement is done, the home loan EMI’s will commence right away. The bank would charge you a simple interest on the amount of the home loan disbursed.
In case when you avail a part of a home loan, the bank or the financial institution will charge you a simple interest which has been actually paid out till your complete home loan sanctioned amount disbursement. This simple interest payment on the part payment is called as pre-EMI interest.
Any property that is in the process of getting built-up, is known as an under construction property. In such cases, the possession of the home is given by the builder at a future date.
Since home loans are for long term, you can avail a home loan for a minimum of 5 years and up to a maximum tenure of 30 years. This home loan tenure will however depend on the amount of the home loan that is sanctioned by the bank or the financial institution.
The lenders consider the following factors for lending you a home loan:
The joint borrowers for a home loan can be maximum six. But, co-borrowers can be only spouse, parents and siblings for applying for a home loan in India.
There are certain banks and financial institutions who will offer you the leverage of switching from a floating home loan to a fixed rate and vice-versa. But, this can be possible only in certain home loans. Your lender will be the best to inform you about this conversion.
• Nationality-Indian Residents, NRIs & Person of Indian Origin
• Credit Score–You need to have a credit score of 750 or above
• Age Criteria–You should be min 18 yrs & max 70 yrs old
• You should have a minimum work experience of 2 years
• In case you are self-employed, then you should have a min 3 yrs of business continuity
• You should have a minimum salary of Rs.25,000 per month
• Loan-to-Value (LTV) Ratio should be up to 90% of property’s value
You may have bought an insurance policy, yet have thousands of queries and doubts. Our ‘Your Policy’ section is the fastest way to resolve your insurance related doubts and queries. All you need to do is attach your active insurance policy and write to us about your queries. We never let our customers down..
Many questions may come in your mind before deciding on the Loan. ‘How much Loan I would need, how many years I shall invest for, what would be the EMI’s, etc. Loans Calculators are life-savers. They help you know your needs and assess the potential costs. Grey Font brings to you various Loans Calculators and interactive tools to help you calculate your needs. In order to get better results, ensure to enter a value in all the possible fields.
Check out everything you need to know about the determining home insurance rates. Also, read about what needs to be considered while buying home insurance.
Term Insurance - Find out the huge benefits of a term insurance plan if you have a home loan to pay and know how select the best term insurance plan for a home loan
Home Insurance Policy - It important to consider your home insurance policy before you remodel your house, read more to find out everything about remodelling your house
Home Insurance - Buying a home insurance policy can be difficult at times. It is important to know what exactly your home insurance covers and the types of coverage available
Home Insurance Claims - Checkout Tips to Make Your Home Insurance Claim Process Smoother and also know the List of Information you Require for Home Insurance Claim.
Home Insurance - Checkout Tips To Lower Home Insurance Premium and also know Few Ways to lower Home Insurance Policy Premium