“Home is where the heart is”, a place that gives you emotional and spiritual warmth. The growing real estate prices have made buying a property a daydream for most of us. Home Loan is a way, which brings you closer to your ‘dream home’.
Types of Home Loan
You can avail if for constructing a home, purchasing a ready built house / flat (from builder or a resale property), residential plot, LAPetc.
Types of Home Loan interest
loan interest rate normally depends on the amount of loan you wish to avail. It too depends on the type and term of the loans. Banks will offer you with an option of Fixed rate or Floating rate of interest.
Fixed interest rate It allows the repayment in fixed equal monthly installments (EMI) over the entire tenor of the loan as it does not change with market fluctuation. But essentially this is not the case. All the banks include the reset clause on fixed interest rate in their Home Loan agreement papers which clearly denote that the bank can revise the rate even during the period of agreement because of unforeseen alteration in the money market condition.
Floating interest rate It refers to interest rate that depends on market and varies according to economic condition of the country. A customer can always pre pay a part loan or repay the entire loan any time during the tenor based on the lenders norms for the same.
- An application form duly signed by the applicant
- Age proof
- Identity proof
- Address proof
- Income documents
- Bank statements
- Employment details
- Proof of educational qualifications(if applicable)
- Details about the property (if finalized)
- A processing fee cheque
It is a non refundable fee normally charged by all banks for every home loan application. The same varies from bank to bank and is generally between 0. 50% to 1% of the loan amount.
Home loan eligibility
The income of an individual establish his loan amount eligibility. However, banks have their own set methods to estimate the eligibility. The loan tenor and the interest rate too play an important role in calculating the loan amount. A good employment, repayment track record increases the probability of getting a housing loan. Customers meet the grade of availing the best rates depending on their profile, income, turnover, repayment history, builder profile etc.
How much would the bank finance?
Banks mostly finance 80% to 90% of the market value as a loan. The customer initially needs to make a down payment (the difference between the actual property cost and the loan amount), on his own. Banks sometimes even fund the registration cost and the stamp duty as a part of home loan.
All leading banks like ICICI, HDFC and others cover the loan with insurance to protect the family from loan liabilities in case of unfortunate demise of the borrower.