As per a report, the demand for home loans in India rose almost by 26% in the first half of 2021, thanks to improved affordability, reasonable interest rates and likes. However, besides the factors mentioned, a home loan entails a host of benefits.
Thus, it is imperative for aspiring homeowners to know home loan and its different aspects before applying.
Features and benefits of home loans
The main purpose of availing a home loan is to finance a property purchase. However, individuals need to remember that lenders approve only a certain percentage of the current valuation of the property they want to purchase.
For the rest of the amount, borrowers need to pay a down payment. To know more about what is a home loan and its unique features, individuals need to refer below:
- Substantial funds
Eligible applicants can avail a sizable loan amount to purchase a property. However, to reduce the repayment burden, individuals can make a bigger down payment.
- Customised repayment options
Selected lenders also approve and sanction the loan amount from the property’s construction phase. They also offer customised EMI payment options. For better estimation, individuals can also use an online home loan calculator.
Besides EMIs, it will also show interest payable and the total amount payable. This online calculator also accompanies a loan amortisation schedule that shows the breakups of principal and interest components of each monthly instalment.
- Competitive interest rates
Being a secured credit, the interest rates of a home loan are affordable. However, to secure the best deal, individuals can compare different lenders.
- Easy balance transfer facility
The existing home loan borrowers can transfer their outstanding loan amount to a new lender offering better rates and service terms. It helps reduce the EMI burden and also the interest outgo.
While at it, individuals can also qualify for a top-up loan of as high as Rs.1 crore as per eligibility. For instance, individuals must have a smooth repayment history. Moreover, since this additional fund does not impose pre-conditions on end-use, individuals can utilise it for varied financial requirements.
Selected financiers also offer pre-approved offers to existing borrowers. These are effective in reducing loan processing time and making it hassle-free. Besides home loans, these offers are also available on various financial products like loans against property. Enter your contact number and your name to check pre-approved offers online.
- Minimal additional charges
Besides comparing the interest rates, individuals should look for lenders that offer part-prepayment, foreclosure facilities at nominal charges.
- Longer tenor
The home loan tenor ranges up to 30 years. It allows individuals to repay this loan comfortably. However, note that while a longer tenor ensures affordable EMIs, it increases the interest outgo.
- PMAY benefits
Individuals can also avail a home loan under Pradhan Mantri Awas Yojana scheme and enjoy a subsidised interest rate. However, in this case, they need to meet certain eligibility parameters.
However, to reap the benefits of this credit, only knowing about what is a home loan is not sufficient. Individuals need to fulfil specific eligibility parameters.
What is the home loan eligibility?
The home loan eligibility criteria vary across lenders. It is also different for salaried and professional, and self-employed individuals. Following are some common ones that one needs to consider:
- Applicants must be residing Indian citizens.
- Age should range from 23 to 62 years for salaried individuals and 25 to 70 years for self-employed individuals.
- The salaried applicants must have a steady income source and work experience of at least 3 years.
- Self-employed applicants must have a business vintage of at least 5 years.
Besides, individuals may also need to meet lender-specific eligibility to secure a substantial fund. Additionally, they also need to submit a list of documents to boost their eligibility.
How to apply for a home loan?
Individuals can apply for a home loan online or offline. However, lenders encourage applicants to choose an online application to expedite the process.
While this home loan application process varies with lenders, following is the common process to apply for it:
1: Open a web browser and search for home loans online.
2: Visit a reputed lender’s website to check interest rates and other terms and conditions.
3: Choose a lender and open an online home loan application form.
4: Fill it up with relevant details and submit it online.
5: Upload scanned documents .
On receiving the application, a representative from the lender will contact you shortly to initiate the loan processing. After checking the loan eligibility and documentation, lenders approve this credit.
After loan approval, the lender sends representatives for site inspection and sanctions this advance after that. However, since this fund comes with restrictions on end-use, the disbursed amount goes directly to the builder or construction agency in instalments.
These are the crucial factors that individuals need to know besides what is a home loan. With this information, intending borrowers can avail the best deal.