Home loan is a kind of loan which is disbursed by any lender or financial institutions to an individual for buying a residential property. While some of applicants might be aware of the following terms related to home loan, but not all are well acquainted with the same. Thus, while negotiating with the lender, you must have a better understanding of few technical terms and operational details of housing loan that will come handy for your dream home.
Principal Amount: The principal amount is the loan amount for which a borrower has approached the lender for housing loan.
Down Payment: Lenders require that a borrower contribute a certain amount as a down payment while buying a home. The down payment can be in the range of 15% to 20% of the market value. The down payment varies from one lender to another and also depends on the borrower’s credit history/monthly income.
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Features and Benefits of Housing Loans
- Today, property prices have snowballed so much that majority of buyers have to avail housing loans to buy their dream home. However, before you enter into the territory, you must get a fair idea about the nature of housing loan and how they actually function.
- To begin with, you can apply for housing loan on two type of rate of interest- fixed and floating. The former one, the interest rate remains fixed during the entire loan tenure, while in the latter one the interest rates fluctuates according to the market conditions.
- Well best home loans are not just for the purchase of a new home, instead of this, you can also take it for the purchase of plot, secondary house. Or you can take best home loans online for repair and renovation of your old home.
- Income Tax Benefits: Under various sections of the Income Tax, a borrower can avail of deductions on the principal as well as the interest component of the best home loans. A borrower can claim for deductions under section 80C of the IT act for the principal repayment. The maximum amount that can be claimed under best home loans is up to INR 1.5 Lakh. In addition to this, under section 80EE, the maximum deduction a borrower can claim is up to INR 50,000, if the amount of loan taken is INR 35 lakh or less, and the overall value of the property does not exceed 50 Lakhs.
How Housing Loan in India Works?
Almost every prospective customer who dreams of his or her own home applies for online home loan. It is an important decision, as the financial investment it requires is huge. In order to sail through the process, you must have a clear understanding of how housing loan in India works. Today, almost all the lenders that include public sectors, private sector banks, and Non-Banking Financing Companies offer online home loan. The norms may vary from one lender to another, but the basic criteria of lending remains the same. Here, Apna Loan tells you how housing loan in India works:
- Every lender including NBFC’s list the rate of interest for various best home loans products on their websites and loan aggregator sites. So, that you can compare the various features and benefits, drawbacks and apply for online home loan. You can select the one that suits your requirement.
- Most of the lenders lend up to 80% to 85% of the total cost or market value of your dream home. A borrower has to arrange the 20% or more in advance.
- Most of the projects are approved by the lenders, so when you shortlist the property or flat of a particular project, hence an applicant make sure that which lenders have approved this particular project. Actually this makes the home loans in India appraisal process less time consuming. In addition to this, housing loan products and schemes like loan against property, top-up home loans, technical and legal verifications is done through lenders to assess the loan amount.
- The home loans in India process starts with an evaluation of the loan application form, your documents, etc. So make sure that you have all the originals and Xerox copy ready before you apply for online home loan.
- After this, check with the lenders whom you already have some kind of relationship to understand their housing loan At Apna Loan, you can compare the various features, benefits, interest rate of all the lenders at one place.
- Housing Loan in India has substantial tax benefits under section 80C, section 24 and section 80EE. Hence, a borrower must be aware about the complete process while taking home loans in India.
Housing Loan Eligibility
Owing a house is a dream for every working class individual. However, financial constraints become hurdles for most of us. Hence, a borrower can avail an online home loan. But, it includes stringent parameters that an applicant needs to satisfy in order to be eligible for house loans. Some of them are:
Age: A borrower’s age becomes quite important factor in determining the house loans eligibility. As the maximum loan term is generally capped at 25-30 years or the age of retirement. A younger individual gets an advantage of availing a loan for longer tenure.
Current Financial Position: For the lenders to ensure that you can repay your home loans in India regularly, your present and future income have a significant impact on determining the loan amount.
Credit History: A good credit score adds credence to borrower’s eligibility as it implies that the chances of you defaulting on your home loan would be minimal.
Financial Liabilities: Lender considers your loans taken in the past such as car loan, or any other debt. This is done to determine if you would be able to bear the incremental burden of an additional plan.
Factors That Affect House Loan Eligibility
Age: is the foremost factor which a lender considers when one applies for a housing loan in India. Usually, most of the lenders attempt to limit the house loan on the basis of primary applicant’s age. Let’s say, if you are a young professional (in early 30’s) can avail a house loan with usually for a longer tenure- up to 20 to 25 years without any hassle. But the older ones especially those who are above 45 can find it difficult to fall under the bracket of extended tenure.
CIBIL Report: All lenders scrutinize your credit repayment history from CIBIL. CIBIL is credit information bureau India Limited, which regulates your credit information. The country’s regulator uses your PAN car number to maintain and update all the records in detail, i.e. relationship between you and various creditors. A negative entry can bring down your house loan eligibility and credit score significantly.
Income: Let’s categorize this into professional, salaried and self-employed. Whichever category in which you fall into, a steady and regular source of monthly income is a must for house loan. So, basically there are fewer risks in providing best home loans if the applicant is an earning individual.
Rate of Interest: House loan eligibility is always inversely proportional to the rate of interest, that simply means if the interest rate is more, eligibility will be less and vice versa. In addition to this, loan term also matters. If you opt for a longer tenure, your eligibility will improve for housing loan. Apparently, EMI too will be lesser and manageable.
Outstanding Loans (if any): Most of the lenders always recommend keeping the EMI to income ratio for house loan in between 50% to 65%. This is to leave window for future loan or if you have any existing loans. But, a borrower must remember that unsettled loans could be a setback on your house loan eligibility.
Documents Required For Housing Loan
The documents that need to be submitted for housing loan may vary from one lender to the other. Some of the necessary and common documents to be submitted are as follows:-
- Duly filled and signed housing loan application form
- Two recent color passport size photograph.
- Identity Proof such as Aadhar Card, PAN Card, Passport or Driving License
- In order to avail housing loan, a borrower need to give his or her current residential proof-telephone or electricity bill, Voter ID, etc.
- Bank Statement for at least 6 months, and salary certificates, Form 16/ITR.
- Balance Sheet certified by CA’s, Profit and Loss account statement, (for non-salaried applicants)
- Entire chain of documents of the borrower’s property is considered by lenders.
Apply for home loan with ApnaLoan
Though, it may sound tedious at first, but applying for best home loans online has never been so easy. In order to help buyers fulfill their dreams, Apna Loan has made the online home loan process much simpler. Unlike in the past, when home purchases were largely dependent on personal savings, now individuals have the freedom to avail best home loans online from the comfort of their home or office. So, if you have already finalized your dream home that you want to buy, then it’s the time to finalize the best home loans too. The sooner you apply, the faster is the loan processed. Hence, with Apna Loan, you can avail a host of benefits-
- Before applying for the best home loans, you can check your eligibility.
- With online Home Loan EMI tool, a loan applicant can know his or her eligibility and calculate the interest.
You can check if you are applicable for any concessions or not. Some lenders offer concession rates for women applicants.