Saving up for your dream home? Eyeing a property for your retirement gataway? Home Loans can make this dream a reality. Read the FAQs below before going in for a Home Loan.
Home Loan is offered to individuals who wish to purchase or construct a house. The property is mortgaged to the lender as a security till the repayment of the loan. The bank or financial institution will hold the title or deed to the property till the loan has been paid back with the interest due for it.
Through a Home Loan, one can purchase or construct a new house/ apartment; a Home Improvement loan is offered to those who wish to renovate their houses; a Home Extension loan is for consumers planning to add extra space to their house such as a new room or a new wing; a Loan against Property is offered for a individuals seeking loan against an already existing property; a Land Purchase Loan is provided to consumers buying land as an investment, maybe to build a house later on and a Balance transfer loan is basically a home loan to pay off an existing home loan as this enables you to avail a loan with a lower interest rate.
The amount that can be financed typically depends on the status of the borrower (resident/non-resident), type of home loan (renovation, property purchase, property extension) and the financial institute. It is generally offered for up to 80-85% of the cost of the property.
The repayment tenure takes into consideration the repayment ability of the borrower based on their income and existing EMIs. The typical duration for which a home loan can be taken is anywhere between 5-30 years.
The interest rates for Home Loans can be fixed or floating, or partly fixed and or partly floating, suiting the needs of the borrower.
For a Home Loan, the basic registration charges, transfer charges and stamp duty costs are added to the cost of the home. Some other charges include:
- Processing charge or booking fee – paid to the lender when you apply for the loan. It could be fixed or a percentage of the loan amount
- Pre-payment penalty – if the loan is repaid before the agreed duration, some lenders may charge a penalty, up to 2% of the amount pre-paid.
- Miscellaneous costs – there could be a documentation or legal fee, also known as “application fee”
Refer this link, to better understand how loan eligibility is determined by a financial institute.
There are certain tax benefits available on your Home Loan. Please check with your accountant to know of these benefits.
Lenders look for personal details such as a good credit history, annual and monthly income, existing EMIs of the consumer, a clean title to the house/ property and the location of the house before approving a home loan application. Buy our credit report here to ensure your credit history and personal details are in order so as to avoid rejection from the lender.