Introduction To Home Loan - Loan Trivia


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Monday 7 December 2015

Introduction To Home Loan

In a recession market, funds have been a major issue for most of us. As rate of property in India have reached sky heights it has become very difficult for a common man to purchase a home or a property without taking loan. But for most of us in India, loan means a burden on any individual. It's a myth for most of us. If availed properly from the right lender at the right interest rate then it is very useful as you could own your dream home within a short period of time against a small interest rate. Dream of owning a home has become true with banks and housing finance companies offering the loans with best offer.

Home loan is defined as the sum of money a bank or the financial institution lends you to help to buy or purchase or build your dream home. By taking a home loan you pledge your home as the lender's security for the repayment of the loan. The lender i.e. bank or the financial company will hold the title or the deed to the property until the loan is paid back with interest rate. Usually home loans have much longer tenure i.e. between 5 to 30 years.

Most of the banks do not lend the loan beyond reaching 65 years or we can say retirement age. The amount of loan one is eligible for depends upon the borrower credit history and profile. Down payment have a big influence on interest rate. Generally by rule 85% of the cost is lend by the bank or the financial company and around 15% of the money is expected as the down payment. There is a way from where you can get the home loan with a low interest rate
There are two types of interest rates

  • Fixed Interest Rate:- It remains constant throughout the tenure of the loan regardless the condition of the market
  • Floating Interest Rate:-It decreases or increases depending upon the fluctuations in the market. Most banks prefer floating interest rate
Home Loan Requires Some Documents
  • Identity Proof: Driving License, Voters ID, Bank Pass Book and Passport
  • Address Proof: Ration Card, LIC policy, utility Bill (Telephone, Light, water or gas)
  • Age Proof: Birth Certificate, 10th mark sheet, pan Card, passport, driving License
  • Income Proof for Salaried: Latest Pay slips with bank statement, IT returns for 3 years, Appointment, Increment/Promotion Letter, FD certificates, shares
  • Income Proof for Self Employed: Brief intro about the business, Profit and Loss account statement of income, Balance sheet, Proof of income tax returns for the last 3 years

There are many advantages if you apply for home loans. One of the biggest advantages there is tax rebates to those applicants who have availed a home loan. Now days, it is very easy to find the best lender in the market. Search online and compare lender offer carefully. There are many website which compares the best lender with their interest rate in such a competitive market.

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