THE BASICS OF HOME LOAN

What is a Home Loan?

A home loan also called a housing loan is simply the sum of money taken from a lender to purchase a home or for the construction of one. Home loans can also be taken for extending the infrastructure of existing residential property. Home loan comes in both fixed and floating interest rates and payment terms. A variety of home loans can be taken up by individuals for various purposes:

•          For the purchase of any residential property

•          For the purpose of construction of any residential property

•          For the purpose of investing into residential land.

•          For the purpose of an already existing residential property expansion.

•          For the purpose of fund transfers.

What is the working of a Home Loan?

• Home Loan Amount

The loan amount is the principal amount of money that you are entitled to borrow for your home. The home loan amount that you can borrow will mainly depend on your home loan availing eligibility which is calculated on the basis of various factors namely the CIBIL score, type of employment, monthly income, among others.  It is important that you Compare Home Loan Rates from different providers so that you can take an informed decison.

• Loan Disbursal

Disbursement of a home loan amount can only be done when the amount of the loan is transferred to the applicant’s bank account. This transfer can only take place once an individual’s home loan eligibility is approved by the lending bank.

• EMI Repayments

After a month of the day on which the loan disbursement is done, your Equal Monthly Instalment or EMI will begin to charge. For the repayment of your home loan amount, you need to shell out an equal and fixed amount of money on a monthly basis to repay your home loan in the form of installments which can easily be computed using a home loan EMI calculator.

• Loan Closure

A loan is considered closed when you pay all your EMIs up until the tenure of your home loan, along with the principal amount and the interest. Generally, home loans are expected to be paid off within the tenure or term for which they were taken but foreclosure or prepayment of home loans can be made any time before the loan tenure ends. If it is the case of floating interest rates, no charges will be asked for prepayment but in case of fixed interest rates, some prepayment charges may apply.

If you do not prepay your loan, you will have to faithfully pay your EMIs up until your loan tenure is over following which a loan closure will take place. Meaning, your books of home loan will be closed.

Are you Eligible for a Home Loan?

The availability of home loan will be determined based on the following criteria –

•          The borrower must be between the ages of 24 and 65

•          A borrower who is appointed on a salary basis must have a minimum salary of Rs. 30,000 and at least two years of work experience

•          If in case, a borrower is self-employed then they must have at least three years of work experience in their current field

•          If in case the borrower is an NRI or Non-Resident Indian; they should be appointed on a salary basis with at least three years of work experience

What are the Documents Required to Apply for a Home Loan?

Documents Required for the applicants applying for a Home Loan

The following are the documents that can be accepted by the money lending banks for the application of a home loan.  All applicants are required to produce only one/two from each of the following category –

•          Age Proof – Documents that can be considered are Valid Passport, Driving License, Life Insurance Policy, Birth Certificate, PAN Card, School Leaving Certificate

•          Photo Identity Proof – Documents that be considered are Voter ID Card, Valid Passport, Driving License, Aadhar Card, PAN Card

•          Address Proof – Documents that can be considered are Utility Bills, Bank Statements, Property Registration Documents, Property Tax Receipt, Voter ID Card

•          Business Proof – Documents that can be taken under consideration are Registration Certificate for Commencement of Business, your Business Profile on letterhead, copy of the last two years’ Income Tax Returns

•          Income Proof – Documents that can be taken under consideration are Last six months’ operative current account statement, copy of the last three years’ P/L Projection Statement, Bank Statements for the last six months of CC, OD facilities (if taken)

•          Existing Loan Details – Documents that can be considered are provided via bank statements

•          Processing Fee Cheque – These documents are to be issued from your business account

What is a Home Loan EMI Calculator?

Since a home loan involves a large amount of money, the repayment can help immensely in the equal distribution of the loan amount burden. The calculation of EMI done manually can lead to confusion which can result in erroneous EMI results. A Home Loan EMI calculator is a convenient virtual tool to which is appointed for instantaneously calculating the Equal Monthly Instalment amount that is needed to repay for the home loan.

4 reasons why you deserve a Home Loan

Home is a good option to serve the purpose of investment.

Home buying is not just satisfying your instant needs, but it is also serving the purpose of a good investment as the property value surges over the years. Be it an unoccupied residential plot, a well-built house, or an infrastructurally sound apartment you want to capitalize on, it will certainly deliver better returns over the course of time.

Have the bliss of fixing anything that’s broken

Over the years, even the best of the housesend up suffering after some wear and tear. And when it does, that is when you need to shower your love and fix all tiny leaks and big creaks by availing the option of a home loan.

Let’s start the cycle of encouraging the idea of upgrading your home to make it Eco friendly

A lot of homeowners now upgrade their homes in an effort to decrease their carbon footprint. With just a few upgrades, you will be able to set a great example for your not only your present but also your future generations.

Because all of us need and deserve a place to express ourselves Your home is the place where you and your family can find a sanctuary away from the hustle of the outside world. So, there is no point of finding a middle ground on that. Afterall, You should have the luxury of being able to turn your children’s room into a playground of their fantasy.