Home loan is a loan advanced to a person in buying a house or a flat or a property. In a country like India, buying a home is first duty when you start earning well. This is why middle-class income group focuses more to build or buy a house. It has become a status symbol also. To fulfill this dream of a common man, banker or lenders have developed a complete loan market. In order to assist you, We have listed here some important information on How to get a home loan.
As the price of property has lowered in last 1-2 years, there has been an increment in the number of buyers. This is one of the biggest reason of hike in the volume of Home Loan. Now we discuss in detail about it.
Home Loan is categorized as following
- Home Purchase Loan– The purpose of this type of loan is to buy or purchase a new house or flat.
- Land or Plot Purchase Loan-This type of loan is availed to purchase a vacant land. You may purchase a piece of land or a plot for the purpose of construction or investment.
- Home Construction loan-As the name is evident, this loan is meant for the purpose of construction of a new house. If you already own a piece of land or plot and want to construct your house then this is the perfect loan which will solve your purpose.
- Home Improvement Loan-When you are planning the renovation of your existing home or repairs of the old home, you may avail this loan. The interest rate on a home purchase loan and home improvement loan is same. Thus it has become more popular nowadays due to increase in the demand
- Home Conversion Loan-This type of loan is availed when you already have a home loan running and you want to purchase a new home again.
- Home Extension Loan-When you feel that you need to extend the space or area of your existing home, Home extension loan is availed. This may be due to increase in the number of family members or further requirement of space for comfort or luxury in your lifestyle.
Eligibility Criteria for a Home Loan
- Any Salaried or self-employed or professional can apply for a personal loan
- The age of loan applicant should be 21 or above.
- A regular source of income for loan repayment should be there. Higher the income slab means higher loan amount to be availed. Proof of Income will also be required.
- Employment stability is an important eligibility criterion for salaried or professional. Also, self- employed should have sustained for 2-3 years and filled their income tax returns.
- Credit score which is also known as CIBIL score is a key factor. You should have a healthy CIBIL score of 700-900. Before you apply for a home loan, please check your CIBIL score and improve it up to a desired healthy level.
- Qualification of the loan applicant is also taken into account
- Status of existing loan also decide your home loan
- Resident status is to ensure the address and living.
- Income of Spouse adds on the total loan sanction amount
Interest Rate for a Home Loan
The interest of home loan starts from 8.3% with most of the lenders.Women borrowers get a 0.5% lesser interest rate compared to male borrowers. From interest rate point of view home loan has the lowest rate of interest among all types of loan.
Floating Interest Rate
If the interest rate of loan varies periodically over the loan tenure then it is called as floating or flexible interest rate. Bank and private lenders have their own base rate which determine the rate of interest charged on a home loan. The base rate of bank and lenders are revised time to time based on RBI guidelines. This in result lead to increase or decrease in the EMI amount payable by you.
Fixed Interest Rate
The home on which rate of interest remain fixed during entire loan tenure is known as fixed interest rate home loan. These loans are not determined by any marked deviations or RBI Guidelines. This will benefit the loan customer in case of extreme hike or volatility of market conditions upper side. The EMI amount payable remain unchanged in this loan. However, this loan has become less popular due to home affordable scheme of government.