What is a Home Loan? Types, Eligibility, and Key Features Explained

What is a Home Loan? Types, Eligibility, and Key Features Explained

What is a Home Loan?

Complete Companion to Types, Eligibility & Benefits

Houses are a large thing of utmost people, and yet they are very precious to acquire. A home loan will best suit you to ensure that you turn this dream into reality and within your budget. There are some number of effects you can do with a home loan, and it includes buying a new house or apartment and indeed buying land in the country to make your house; you could indeed do some addition to your home and indeed extend it or repair it.

Types of Home Loans in India

Standard Home Loan

Do you want to buy a home? People do, and also the first step is to get a home loan. It is very easy; you take a loan from a bank and buy the house of your dreams. Once the keys are handed over, the plutocrat is returned to the lender through yearly investment payments known as EMIs.

These loans are given by numerous banks. When you qualify by their norms, it is possible to adopt the utmost of the price of the house, indeed as important as 75 or indeed 90 percent. Flashback: the house will be acting as the security to the loan as long as you have defaulted in paying it back.

Home Construction Loan: Build Your Dream Home

Suppose you enjoy land and need a structure; a Home Construction Loan provides you with finances with which you can construct the structure.

Home Loan for House Extension: Add More Space

In case you are a homeowner and wish to extend your house by a room or enlarge it to bring your family together, a Home Extension Loan will give you the needed finances.

Home Improvement Loan: Renovate with Ease

Do you want your home nicer? A home improvement loan may be of backing. It provides you with the cash to conduct forms or upgrades. This may incorporate oil, redesigning leaks, reinstalling cables, or making your roof leakproof. It is all about enhancement and betterment of your home.

Home Loan Balance Transfer: Lower Your EMI

Do you find you are displeased with inordinate interests in your mortgage or bank? Home Loan Balance Transfer is the option that enables you to transfer your loan to another lender. This is generally to admit a cheaper interest rate or better deal. Also, you may admit some fresh finances in the form of a top-up loan when you transfer.

Composite Home Loan: Buy & Build in One Go

Wish to enjoy a house of your own and buy land? The Composite Home Loan is a good option. It is simply a single loan that will take care of the purchase of the land as well as the construction of your house. It simplifies everything since it adds two huge charges in a single combination.

Top Benefits of Taking a Home Loan in India

1. Tax Benefits
A good thing about a home loan is duty savings. The interest and what you pay back may be reimbursed under your levies. As a case, you may get deductions of over 1.5 lakh of the prepayment quantum and up to 2 lakhs of the interest. Interest payments are also subject to special deductions as well as stamp duty.

2. Lower Interest Rates
The interest rates of home loans are typically lower in comparison to other loans. This implies that you pay a reduced quantum overall. And in case you have further to spend later in life, you may be suitable to take out an advanced quantum of plutocrat than your home loan on a lower rate of interest than you could on a particular loan, given it is a top-up loan.

3. Property Checks
When drawing a home loan, the bank posts the house. This will save you from frauds. When the bank appraises the house, it also deems it fit to buy.

4. Long Prepayment Time
The home loans allow you to repay the plutocrat in the span of a very long time, that is, 25 to 30 times. This reduces your yearly payments, and they are manageable.

5. No Discipline on Early Payment
When your home loan is a floating-rate loan, you can make any fresh payment any time free of charge. It is excellent, as you can repay your loan hastily and save up on the interest.

6. Easy Transfer Option
In case you wish, you can transfer the home loan from one bank to another. This is done by people to get lower interest rates, superior services, or further transparent charges.

Home Loan Rates of interest

In March 2021, the interest rates on home loans in India range anywhere between 6.5 and 12.00 percent. These rates depend on which lender and are affected by similar effects, such as the RBI repo rate, affectation, and frugality.

Other banks offer a minor reduction of 0.05 percent on interest to particular groups like women, workers in the banks, and the senior population.

Interest rates on home loans are, moreover, fixed or changeable. A fixed-rate home loan is fixed after a given period, sheltering you against the requested oscillations. A variable-rate domestic mortgage moves every time there is a change of conditions in the request that may be, moreover, good or bad for the lender.

Home Loan Eligibility Criteria in India

There are guidelines given to the home loan campaigners in banks. Their primary consideration is the credit history of the applicant to determine how he or she will repay the loans. It would be desirable to have a credit score of 750 or over. Other material factors are:

• Age
• Job Type
• The smallest periodic earning
• Collateral
• Periphery conditions
• The fiscal stability means debts and job security
• Occupancy (Resident Indian / Non-Resident Indian)

Documents Required

These are the documents that you should attach, and also hand in your duly filled loan application form to secure a home loan application. Depending on your profession, you will have to provide different documentation.

For Agriculturists:

• Application form including photograph
• Address and identity verification
• The last 6 months bank statements
• Processing check fee
• Title documents of the agricultural land depicting ownership of land
• Title deeds of farming on crops
• The amount of loans that were taken (in the previous 2 years) (if any)

For Salaried Individuals:

• Photo application form
• ID and residence photo ID
• The last 6 months bank statements
• Current payslip
• Form 16
• Check of processing fee

For Businessmen / Self-employed Professionals:

• Photograph application form
• ID and address identification
• Bank statements of the last 6 months
• Certificates of educational qualifications (where they exist)
• Business profile
• The history of income tax returns of the last three years (self and business)
• The profit and loss accounts and balance sheets of the past 3 years
• Check processing fee

Home Loan EMI Calculator – Monthly Repayment Tool

An EMI calculator is a convenient device that aids you in determining the amount of money you have to pay monthly as an installment on a loan.

To calculate your monthly payment using our Home Loan EMI Calculator, you just have to put in the amount of the loan, the duration, and the interest rate. It is simple to calculate, and all that is needed is the loan amount (P), time (N), and the interest rate (R).

Check Your Home Loan Eligibility – Click Here

How to Apply for a Home Loan

Technology has made applying to get a home loan easy. You may visit a branch office of a bank to find details on home loans, or you can also apply online.

Once you submit an application, the bank will authenticate the required documents and work on your application. This involves checking your credit score and evaluating the value of the property as well as evaluating your income and debts to determine whether you qualify.

After all files are checked, the bank gives a final choice to accept or reject the loan application.

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Vikas Saini: Published on 01/7/2025 12:32:29 PM