HOME LOAN 

Having a place to call your home is a dream for all. The joy, pride, comfort and relief in owning your place are unmatched by any other pleasure in life. However, this may seem a far-fetched impossibility for many due to the financial overload of buying a property. To simplify your struggles and bring you closer to your goals, financial institutions (both public and private sector banks along with non-banking financial corporations) offer the facility of home loans.

You may already know what a loan means. It is a lump sum lent to a party in need in exchange for the promise of future repayment with certain additional charges. Similarly, a home loan is a monetary assistance extended specifically to buy or renovate a house. You can negotiate with your respective provider about the interest rates, repayment clauses and other necessary steps for clarifying your loan.

A home loan isn’t just about acquiring money from a willing party. It is a tiered process that involves various steps, formal obligations and legalities. It would be best to abode by these to have a sanctioned and appropriate loan proceeding. We understand that the terminology and rules can appear complex and intimidating for many. We will take a detailed look at the various aspects of a home loan to help you gain more clarity and enhance your knowledge.

Types

The modern-day definition of home loans encompasses numerous types of expenses that go beyond just purchasing a house. You can avail of a home loan for many house-related expenses. In addition to a traditional home loan that allows you to buy a house, the different types of home loans available for buyers are as follows.              

• Home Purchase
• Land purchase and construction:
• Home construction loan: You can cover the costs of constructing/building your home
• Home repair loan: Any major repairs or renovations within your home can be supported through this loan.    
• Home extension loan: If you wish to add or expand your property space, you can apply for this home loan category.
• Land purchase loan: This loan is specifically for those who want to buy a piece of land instead of a proper home.

You can assess your requirements and accordingly apply for an appropriate type of home loan. If you need clarification about which category is more suitable for you, speak with a loan provider or real estate expert.

Benefits

The prospect of having any benefits in a situation where you are borrowing money may seem unlikely. However, a home loan holds multiple benefits for customers. When you apply for a home loan, you can enjoy the following perks.

• You can claim a deduction in the income tax on the interest and principal amount.
• The extension of the repayment tenure can be stretched out to as long as 30 years. This level of leisure and convenience is hardly available in any other kind of loan.
• The rate of (interest) or EMI repayment can be more convenient and affordable than the monthly rent of a property that isn’t yours.
• You can transfer your loan to a different lender willing to pay your dues at a lower interest rate if needed.
• You save yourself from the inflation in property rates by availing of a fixed(Not available now) home loan repayment.
• You can negotiate to get a competitive interest rate against your loan.

With these benefits in place, you can take a sigh of relief and have a stress-free purchase of your dream home.

Eligibility

There are certain guidelines and necessary criteria which one must qualify for when availing of a home loan. It is a mandatory prerequisite for legal purposes. Before applying for a loan, you must check with your respective provider to ensure your eligibility. Typically, your candidature for a home loan is assessed on the following basis.

• Age (favourable age bracket is usually 21-60 years)
• Gross monthly income
• Residential status (national resident or NRI)
• Past and present status of loan(s)
• Employment status
• Necessary work experience (Not required)
• Minimum annual business income (Minimum annual income)
• Record your credit score
• Any existing liabilities, mortgages, or loans

You may be asked to submit necessary paperwork and proof or participate in needed investigation processes to prove your eligibility.

Required documents

A home loan process requires precise and transparent documentation to avoid complications or scams. You must maintain adequate paperwork from the initial application process until the very last instalment. When you go into applying for a home loan, it can be helpful to carry along the following papers.

• Passport size photographs
• Carefully and duly filled home loan application/form
• ID proof
• Proof of residence
• Proof for age
• Income proof
• Bank statements for past six months
• Income tax return for the past three years
• Property-related paperwork (deeds, sale agreements, etc.)

Remember to have xerox copies ready to make matters hassle-free and convenient. You may also be asked for other papers besides the documents mentioned above. 

Things to consider

The process of home loans is laid out in simple and comprehensible terms. However, there are some key points and things you must keep in mind. These can further simplify your loan process and offer a seamlessly good property experience for your dream home.

• Getting a pre-approved loan can be a good option. A sanctioned pre-approval helps you define a budget per your income and niche down your searches. This is an efficient way to save time and effort. (Pre approval loan can help to find the home as per your financial eligibility)
• Determine your loan amount well in advance to make sure everything is clear. This helps in making necessary arrangements and payment plans.
• Have a word with your concerned loan provider to set a defined repayment duration.
• If you are repaying through EMIs, set a monthly limit of the loan payment that is sustainable as per your net income.

With that, we now know about the basics of home loans. Take a step closer to fulfilling your dreams without burdening your pockets.