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.
Types of 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.
Who can apply for a home loan?
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.
How much loan can I get?
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.
What does bank check before sanctioning home loan?
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.
What is 'interest rest'?
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.
Other than the interest, what are the other costs I have to take into account when considering a housing loan?
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
- Administrative fee: This again, may be a percentage of the amount sanctioned. You have to pay this fee when you accept the offer letter of the loan provider. Legal charges: Some companies may also insist that you pay for the legal expenses they incur for getting your property documents scrutinized by their lawyers. Technical charges: A charge to meet expenses on technical site visits to your property. Stamp duty and registration charges
If in case, you do not want to accept the loan offer, not all housing finance companies will refund the fees- some may retain a portion of the processing charges. You can request an increase/decrease from the original loan at any point of time.Comparing other loans like working capital loans,personal loans,the demands for home loans are at Top.