What is a Home Loan?
Any amount of money borrowed from a bank or an NBFC for the purchase, expansion, or construction of a home at a certain fixed or floating rate of interest, payable in EMI or Equated Monthly Instalment over an agreed period, is termed as a Home Loan. The property remains as security with the lender for the term or period of the loan. You may avail a home loan for purposes such as:
- Purchase of Residential Property
- Acquisition of Land
- Home Construction
- Home Expansion
- Home Renovation
- Balance Transfer
Different Types of Home Loan for Your Varied Needs
A vast array of institutions offer you the best home loan rates at the most competitive rates and affordable EMIs.
Types of mortgage and home finance are discussed in brief below
Home Loan
A Home loan happens to be the most common type of loan wherein the house is held as collateral until you repay the loan. Numerous housing finance companies, public and private banks make such offerings with a choice of repayment options.
Home Construction Loan
If you have a plot of land and lack financial support to construct a home on that piece of property, you may choose a house construction loan. Such borrowing is mainly made to construct or repair a major part of your home.
Home Extension Loan
Should you already own a home, and feel the need to extend the building, add an annexe, or build another floor, etc., Home Extension Loan is your go-to option that finances such needs.
Home Improvement Loan
All of us wish to improve and upgrade our homes for a better life. From your old-age furniture, fixtures to faulty lightning systems, Home Improvement Loan funds all your plans.
Home Loan Balance Transfer
Burdened with high-interest rate debt on your current home loan? Home Loan Balance Transfer lets you transfer your debt to a low-interest rate charging plan to lower your burden and improve your paying capacity.
Composite Home Loan
A Composite Home Loan empowers you to purchase a plot and construct a house as well on the acquired land; both with a single loan and within a stipulated time mentioned by your Bank.
Home Conversion Loan
Should you want to move from your present dwelling place to a new dwelling due to professional or personal reasons, you may opt for a Home Conversion Loan. A home conversion loan facilitates the smooth conversion of your current loan from your old home to your new home.
Pradhan Mantri Awas Yojna
The plan of the Government of India to allow every Indian Citizen an opportunity to own a home in India via the drafting of the Credit Linked Subsidy Scheme or CLSS is known as Pradhan Mantri Awas Yojna. Under the PMAY, a citizen can avail Home Loan from almost all banks allied with this scheme.
NRI Home Loan
If you are a patriot, a Non-Resident Indian, and wish to own residential property in India, NRI Home Loan is your choice. Though the formalities for application may be a little different, you can still get a loan up to a certain percentage of your property value.
Characteristics of a Home Loan
Home Loans are Secured Advances, which can be availed by mortgaging the property you seek to purchase.
Lenders offer a Minimum Home Loan Value of Rs. 2,00,000 payable in Equated Monthly Instalments (EMIs)
Lenders offer a Maximum Home Loan up to 100% of the Value of your Property
You are offered a Home Loan subject to your income, employment type, credit history, the location of your property, and other factors.
Interest Rates available on Home Loan are of three kinds. Fixed Rate, Floating Rate, Marginal Combination of Fixed and Floating
Lenders offer you a Minimum Home Loan Repayment Period or Tenure of 5 years & a Maximum of 30 years.
Registration charges, processing fees, prepayment penalty, commitment charge, and miscellaneous charges for documentation and consultation, may apply on your home loan.
Depending on the lender you select, you may be offered a home loan pre-payment facility with or without a prepayment charge.
You are entitled to tax benefits on your home loan according to the Income Tax Act, 1961.
You may avail a home loan with your spouse or parent as a co-applicant or a joint applicant, for which you can avail tax benefits too.
Steps To Acquire A Home Loan
- Enter your details in the Home Loan Application Form
- Furnish your essential documents as asked to further the process
- Pay Home Loan Processing Fee
- Your Home Loan Application and Documents will be inspected and verified
- Your Home Loan Application will be queued and sent for approval or sanction
- Your lender will visit the property you intend to purchase for a legal check.
- After approval, your Home Loan Amount will be disbursed to your Bank Account
