Owning a home, especially in India, has been a long quintessential thing in India. But in this modern era, where the whole world’s economy hinges on an extremely volatile stock market, buying a home will not be that easy.
But if you’re purchasing a home for the first time, you need to know everything about the know-how of home loans in this present scenario. This post will give you some useful insight about home loans, the types, and how you can get one.
Home Loan: A Small Definition
The home loan India is a form of monetary reinforcement provided to fund the construction or purchase of a residential property. In these modern times, a home loan can also be utilized for refinancing an existing home loan. Otherwise, it can also be used for reimbursing the cost of purchasing a second-hand or used residential property.
Types of Home Loans
You will come across different kinds of home loans. Each loan is used for different reasons, and you must choose the one that matches your requirements. Here are some common types of loans.
-
Land Purchase Loans
These types of loans are utilized for purchasing land where a person aims to build a home. Lenders provide 85% to 90% of the cost, and the remaining 15% is put together by the person taking the loan. Many banks in India offer land purchase loans under different names.
-
Home Enhancement Loans
This kind of loan is provided to all those individuals who cannot mobilize funds to renovate or remodel the house they are currently residing in. The maximum home improvement loan will depend heavily on an applicant’s monetary standing and debt-to-income ratio.
-
Home Construction Loans
Home construction loans are available for all people who wish to construct or build a residential property of their own. The approval and application method to obtain this loan is a bit challenging. For instance, when a person wants to include the land’s cost as a component of the overall property price, they should purchase the property within the preceding year.
-
Home Purchase Loans
These types of loans are one of the most well-known home loans in the country. Here, a person utilized the disbursed loan amount to buy a newly constructed residential property or an already constructed one. Nearly all the banks in the country provide this type of home loan. But every bank follows its loan terms and interest rate policy.
Eligibility Criteria for Home Loans
The NBFCs [Non-Banking Financial Company] and all the banks have their eligibility criteria, which every home loan buyer must meet. These are:
- The home loan buyer needs to be between 18 years to 60 years of age
- He/she needs to earn more than the income quoted by all the banks
- He/she has to be self-employed or salaried with a good income.
Apply for a Home Loan: Documents Needed!
Home loan providers follow the same type of documentation process right before they sign a loan application. Under this section, you will find the list of documents which you need to provide when opting for a home loan.
- Fill up and sign the application and attach your photograph
- Provide both residence and identification proof. For residence proof, you can provide a copy of your driving license, passport or utility bill. For ID proof, your PAN Card will be a good choice.
- Bank statement for the past 6 months
- A cheque for the processing fee
Conclusion
Home loans have made things easier for individuals who require immediate funds to build or purchase a home. All the major banks in India provide them, but each has a different interest rate and terms and conditions. Be sure to check your credit score, your borrowing capacity and the loan tenure right before you apply for the home loan.
