Best Home Loan In IndiaApply Now
Home is the necessity of Life. Having own house in current scenario shows that you are happily growing in your career and society. And in our country (India) this is also showing a social status symble. Earning of people is increasing day by day and so is their wish to invest. And Home Loan is a best medium of investment. Investing in property seems a good and fair way to invest in India and home loan is Best way of Investment. But as prices of House are not so small, therefore Home Loan is very supportive in fulfilling your dreams. Presently we have so many options including Banks and NBFCs for availing Home Loan in India.
More about Home Loan in India
There are many more important things about the Home Loan which are worth knowing:
- Loan amount of Home Loan depends on various factors. Home Loan amount may increase or decrease depending on credit history, income, the locality/city in which property is situated and various other factors also.
- Home Loan in India is a Secured Loan and this gives an advantage as interest rates are lower for Home Loan in comparison of Personal Loan (Unsecured Loan).
- Property is the collateral while taking Home Loan. Lenders mortgage the property for the security purposes. Putting property as security reduces the risk level of lenders as they can auction off the property in case of default in repayment of Home Loan.
- The EMI on Home Loan is assessed as per your repayment capacity. This EMI is basically comprises of two factors i.e. Principal amount and Interest Portion. This EMI should be assessed by using EMI calculator for Home Loan before applying for Home Loan.
- There are various charges associated with Home loan. These charges may be like processing fee, prepayment charges/foreclosure charges, documentation charges, registration charges.
- Home Loan lenders generally provide Home Loan on margin of 80% to 90% of estimated property value.
- Home Loan is a loan for long term as its loan amount is big. Therefore, repayment period is also high usually 60 to 360 months.
- It is not a compulsion to carry your Home Loan for such a long period. If you want to prepay your Home Loan amount then you can pay. In case of prepayment lenders may charge some penal charges. This clause of penal provision should be analyzed before applying for Home Loan.
- Some Tax incentives are also available for Home Loan borrowers as per Indian Income Tax Act.
Types of Home Loans in India
As in today’s scenario taking Home Loan is an easy process mostly in metro city like Noida Delhi. People are willing to take Home loan and therefore lenders are providing different schemes and variants of Home Loan. Some schemes are very liberal and others are rigid on contrary. In presence of variety of Home Loan products, it is very important to compare and select appropriate product and lender before applying for Home Loan.
Now day’s purpose of Home Loan in India is very wide in comparison of one or two decade back. You can avail Home Loan for construction, purchase, renovation etc. Because of the needs of the customers lenders are coming up with variety of products.
Home loan can be of the following sub-types:
- For new Purchase of Home: In India this is simple Home Loan for the purchase of new Home. At Afinoz we offer different banks so that you can compare and select the best Home Loan deal available in Financial market.
- For renovation/Extension: Every house or home owner requires renovation or repair work of their house. This category of Home Loan offers loan for the renovation/repairing/extension of your existing house.
- For Conversion of Home: This is unique as this loan is available when you change your house on which loan is already taken.
- For Purchase of Land: There is not much difference between Home Loan for New Home and Home Loan for Purchase of vacant land. This loan is simply for the purchase of land so that construction can be done there.
- For Construction of Land: In India this Loan is for construction of Home. This Loan is relevant for the people who possess vacant land or plot and are willing to start construction of own house.
Determine your Eligibility for Home Loan in India
Before applying for Home Loan in India you should be aware whether you are eligible for Home Loan or not. Eligibility of Home Loan is checked upon certain factors and based on that final eligibility for getting Home Loan is determined. Different lenders have different Home Loan eligibility criterion but every lender is focused on checking the repayment capacity of Home Loan borrower. You can assess your home loan eligibility by considering below mentioned points:
- Who can apply for Home Loan: Salaried, self-employed/professional individual of Indian nationality can apply for a home loan.
- Income Class: In India Home Loan applicant should have a regular source of income which should be sufficient enough to repay the Home Loan. This regular source of income can be salary or business/professional profit.
- Credit History: Credit History determines your trust and worthiness to the lender. A Good credit history always makes it easy to get your Home Loan approved.
- Experience: Work experience of Home Loan applicant also determines his eligibility. Applicant should have some employment experience. This can be different for different lenders.
- Minimum Age: Home Loan applicant must have attained age of 21 years. It is always suggested to know your eligibility limit before applying for a Home Loan in India. Afinoz helps you in checking your eligibility by providing you Home Loan eligibility calculator.
Documents Required for Home Loan in India:
There are certain documents which are essential to apply for a Home Loan in India. Applicant needs to provide such documents to the bank. These documents may vary from lender to lender but a generic list of document is following:
- Home Loan application form completely filled and signed.
- Recent photographs
- Details of investments, if any
- Copy of documents for approval of proposed extension/construction plan.
- Valuation/cost estimation report from evaluator approved by respective Lender.
- NOC from Authority/builder, allotment letter etc.
- In case of salaried applicant past six months’ salary slips and salary account statements.
- IT Dept. acknowledged copies of documents like PL statement and sales receipts that have been certified by a CA.
In addition to these, you will have to also submit the following documents:
- ID proof Documents like PAN Card, Voter’s ID card, Passport, Driver’s License, etc.
- Address proof including, various utility bills like, telephone, electricity and water, Govt issued ID proofs, rent agreement, property tax receipt etc.
- Age proof documents include certificates for class 10th school leaving, birth certificate as well as passport and LIC policy premium payment receipt.
Interest Rates on Home Loan in India:
Home Loan interest rates are dependent on two factors viz. marginal cost of lending rate (MCLR) of lender and spread based on the lender’s risk capacity. But to survive in market lenders always offer most competitive rates. Therefore selection of proper lender is very essential. Time to time different lenders come with different offers also to attract the customers. Therefore selection of lender is very much important.
Home Loan lenders in India offer two kind of rate of interest. One is Fixed rate of interest and other is Floating rate of interest.
Fixed Rate of Interest:
- Fixed rate of interest represents that repayment of home loans will be done in fixed equal installments over the entire period of the loan. Interest rates are not variable because of change in market situations in this case. The Interest rates are generally higher than flexible rate of interest.
Benefits of Fixed Rate of Interest on Home Home Loan in India
- Interest rate does not change because of market conditions
- Fixed rate home loan helps the people in budgeting and they are assured that there is a fixed amount to be repaid every month.
- Though fixed interest rates don’t change but they also carry inherent extra margin of 1 to 1.5% higher than the floating rate home loan.
- If due to market situations interest rate for home loan changes then there will be no change in your existing EMI and repayment schedule.
- Floating Home Loan Interest rates are cheaper than Fixed Home Loan interest rates. The reason being there is no premium for future uncertainty is added by the lender.
- Sometimes floating rates move beyond the fixed rate but that’s only for some time. Therefore opting for Floating rates are better and sensible.
- Disbursal Time of Home Loan: It is very much important to identify a lender with minimum loan disbursal time. In market lenders generally disburse loan amount within a time span of 20 days. You should identify the lender with minimum Home loan disbursal time and loan processing.
- Eligibility for Home Loan in India: While preparing for home loan in India you should check and analyze your eligibility which will ensure your worthiness. Generally home loan eligibility in India depends on your income capacity, stability, work history and credit history as well. Analyze your eligibility and then apply accordingly. You can also check home loan eligibility calculator online to verify and ensure your home loan eligibility in India.
- Home Loan Interest Rate in India: Home loan interest rates in India are of two types Floating and Fixed. Each has its own advantages and disadvantages. Select rate of interest accordingly. Generally interest rates are connected to tenure of loan. So determine the loan tenure and then select the type of interest rate accordingly. If you are still not able to identify the type of interest then identify the lenders who offer a mix of both the interest rates i.e. hybrid rate of interest on home loan.
- Any Other Associated Charges: Lenders charge so many associated charges along with interest rates. These charges may be processing fee, admin charges, file charges, foreclosure charges etc. It is always advisable to read and understand these charges before availing home loan. In India Once you have availed home loan you are bound to pay these charges as and when applicable. Therefore ask the lenders and analyze these charges before applying for Home Loans In India.
- Terms and conditions: There are various terms and conditions associated with home loans in India which should be read and understood before applying for home loan. Once you avail loan you have to comply with their terms and conditions.
Limitations of Fixed Rate of Interest on Home Loan In India
Floating Rate of Interest on Home Loan in India:
Floating rate of interest represents that with change in market rate your home loan interest will also change. Your EMI will be changeable and your repayment schedule will not be constant. Reason for change in the floating rate is change in base rate. Floating margin remains constant generally.
Benefits of Floating Rate of Interest on Home Loan in India
Drawbacks of Floating Rate of Interest on Home Loan in India
Uncertainty in EMI makes your repayment schedule uneven. This makes your budgeting tough as you are not 100% sure that how much exact amount you have to pay in future with respect to repayment of loan. Sometimes because of these floating interest rates you have to pay extra amount just because of increase in floating rate of interest.
Choosing rate of interest is totally up to the applicant as if he wants to add certainty in his budget and repayment schedule he will go for fixed rate of interest but on the contrary if he is looking for a cheaper option then he will go with floating rate of interest.
Most of the people choose floating rate of interest as these rates are generally lower than fixed rate of interest.
If we talk about investment then investing in property is a very good decision. Simultaneously purchasing home is also a big investment and generally people are not able to do so by their own pocket. Investing in home requires some good planning and analysis as this investment once made can’t be liquidated soon. Once you avail Home Loan your commitments to banks are high and you have to fulfill those commitments otherwise you will lose your money as well as your investment also. It is hereby advised that before investing in property you should do a proper analysis of property as well as of various loan options available in the market. Here we help you by providing a comparison platform of different lenders available in the market.
In India There are also some other benefits available for home loan borrower. You can enjoy the home loan tax benefits by availing home loan. Under the current provisions of Indian Income Tax Act you can claim exemption on the interest portion of your EMI. You can also claim deduction on the principal portion of your Home Loan repaid subject to certain limits and provided that you must be residing in that house.
Another benefit of home loan in India is that if your spouse is a co-applicant in your home loan then they can also claim such tax benefits separately. This will double the benefits of your tax exemption and tax deduction. Under the Indian Income Tax Act applicant and co-applicant both are eligible for such deduction or exemption separately.
It is always advisable to not to stretch your budget. If you are going to invest in property then you should definitely avail home loan as it does not exhaust your savings. It is a wise decision to avail home loan as you will be paying for your investment on monthly basis not lump sum. Analyze your income and your estimated EMI and then decide appropriately for getting Home Loan in India.
If you avail home loan and repay it smoothly then it will also help in creation of your good credit history. In India Home Loan is a loan of very long tenure and smooth repayment during such a long period really affects your credit history in a good manner. Credit history is very important if you are looking for a loan. Apart from your repayment capacity every lender ensures your credit history. Lenders confirm that in past you did not made any default in payments of your loan, credit card dues etc. If your credit history is bad then it is very difficult for you to get loan from lenders. Therefore try to maintain good record of your credit history. Even if you are looking for a home loan you must have a good credit history. A good credit history always helps lenders in trusting you that their money is in safe hands. They can assure themselves that you will repay their loan amount genuinely on regular basis.
When you are looking for a home in India then the very first thing you should do is to decide a budget as per your pocket. You have to decide that I will buy a home with this budget. Fixing a budget is very important as you can easily analyze your loan requirement and eligibility. By selecting a proper budget for home will also help you in identifying your future EMI. The time you are finalizing your home loan in India, you should have done a detailed research on available Home Loan options, Home loan interest rates, tenure, other charges associated with home loan. This will be really helpful in identifying the appropriate lender and right loan option. We at Afinoz provide you a platform where you can perform such detailed and dedicated research and finalize your Home Loan lender or options.
Generally people prefer home loan carrying lowest interest rate and lowest EMI. Another important factor while determining Home Loan lender is tenure. Tenure determines the total interest expense therefore tenure is very crucial factor.