So you are planning to finally buy that dream home? That is great news in today's market scenario. The banks have cut down on interest rates, it is a buyers market, realty prices have taken a dip. There never was a better time to invest in property. As a first time home buyer, there are certain basic facts which have to understood for a smooth and easy process. The right home loan can smoothen the road to your dream home. Therefore it is crucial that you have your basics clear. Here are some key facts about home loans.
There are home loans, home improvement loans, land loans, home extension loans, short term bridge loans, low interest housing loans, NRI loans, Balance transfer of home loan etc.
Any Indian resident or NRI can apply for a home loan. You can also take a pre-qualified home loan so that you know your exact eligibility and can shortlist properties basis the range in which your home loan is qualified for.
Banks and financial institutions finance upto 80% of the total amount, which means that the 20% contribution needs to be borne by the borrower. In cases of priority sector loans, upto 90% of the total amount can be availed as loan. It would be a good idea to add your spouse income to your income for a higher eligibility of loan amount.
Banks mainly check the credit worthiness of the borrower- which depends on factors like age, employment, qualification, work experience, previous track record of loan repayments etc. Apart from these there are also the basic KYC norms like Pan Card, Aadhar card and documents like income proof, bank statement, salary slip, Income Tax returns etc.
Interest rest can be defined as the principal outstanding on the date, which is considered to calculate the interest. When we say monthly reducing balance, it would mean that interest is calculated on the principal outstanding at end of every month after taking into consideration payment of the EMI.
There are many fees and charges that add on to your effective cost of taking a home loan. The important ones include: Processing fees: This covers the cost of processing your loan application. This will need to be deposited along with the application form. This charge can be as low as Rs.3000