A home loan is a type of loan that is used to cover the expenses of building a property. A mortgage loan, on the other hand, has no limitations on how the money can be used. The distinction between a home loan and a mortgage loan demonstrates that each is appropriate for a specific purpose.
Documents required for Home loan:
- Documents related to housing. Allotment certificate, sales document, or verified contract of sale NOC from the development authority or construction contractor.
- Aadhaar card, Proof of address on a PAN card, voter’s Id.
- Any of the above-mentioned identity proof documents must be accompanied with a permanent address.
- The bill for electricity.
- Passport sized Photograph.
Eligibility criteria for Home Loan:
Age: 25 years to 70 years for self-employed
Employment position: At least 5 years of business operations in existing business
A CIBIL score of 750 or better is required.
What are the different types of home loans?
- Home loan balance transfer: With a house loan balance transfer, you can convert an existing home loan from the current bank’s loan to another bank.
- Top-up loan: In contrast to your home loan, get a top-up loan and use the high sum for special events, emergency medical treatments, education fees, or whatever else you want.
- Pradhan Mantri Awas Yojana
- Joint home loans: A joint home loan with a partner, relative, or parents can make buying a home more reasonable. The co-applicants are jointly liable for installments in this case.
- Women’s home loan: A women’s home loan provides abundant financing at a reasonable rate, allowing women to become self-sufficient householders and diversify their assets effectively.
- Home construction loan: Like the term indicates, a home construction loan is designed for people who are building a house on their own property. It also comes with a fund to cover the expense of refurbishing after the construction is finished.
What are the types of interest rates for home loans?
There are 2 different types of interest rates for house loans. Continue reading to learn more about both.
a. Fixed interest rate
The rate of interest on a fixed-rate home loan stays unchanged throughout the loan term allows you to calculate the total payback obligation and interest expense at the start of the loan term. Taking out a house loan with a fixed rate of interest makes it easier to budget and manage money.
If there is a likelihood of a rise in interest rates in the long term, a fixed lending rate on house loans is preferable. A fixed rate of interest, on the other hand, may not be appropriate in situations where interest rates are expected to fall.
b. Floating interest rates
Apart from fixed rates, floating home loan interest rates fluctuate throughout the term of the loan. The variable rate of interest on home loans rises or falls in response to the mortgage financing market price.
When market fluctuations show a tendency of lowering rates, you might choose a floating interest rate or home mortgages. A floating interest rate, on the other hand, will not be appropriate in periods of significant market instability because there is a possibility of rising rates, which can lead to larger interest buildup throughout duration.
Keep in mind that base rates are typically 1-2.5 percent higher than floating rates. However, depending on your needs, you can convert from a fixed to a floating interest rate and from floating to fixed during the loan tenure.
How to acquire an effective Home Loan?
Here are a few helpful hints for obtaining a suitable home loan in India
- Analyzing the market and determining the most suitable supplier: Choose a loan with characteristics and perks that fits your requirements, such as an e-home loan and top-up loan.
- Verify your home loan qualifications: Make sure you fulfill the requirements of your desired loan company. Also, use the house loan eligibility calculator to see how much of a housing loan you qualify for.
- Hold a consistent credit score: A credit score of 750 or higher allows you to make a deal for further customizable conditions, as well as fast clearance and a lower rate of interest.
- Identify the additional fees: Study the loan contract to learn about the terms and conditions of the different hidden fees, as well as the total amount of the loan.
- Save money for a down payment and arrange payback ahead of time: Arranging ahead of time can allow you to pay back your debt quickly and arrange for a large down payment once you apply for a home loan.
- Make Sure to keep all appropriate documents accessible before registering for a home loan, whether online or in person, to ensure that your request is handled fast.
Top 5 best banks offering Home Loans:
You may require a loan for a variety of reasons. Many various loan products are available in the market nowadays, depending on the circumstances. With the cut throat competition among the lenders home loan rates have been revised by various banks ahead of the festival season. Almost all players in the Indian market have revised their rates including giant banks like State Bank of India, ICICI Bank among others. However, only a cheap rate of interest does not mean that a loan offer is best. Although interest rates are considered to be one of the most important parameters you also have to look at other factors like processing fees, repayment period etc. while evaluating home loans.
Let’s have a look on the top five best banks offering Home Loans:
1. Kotak Mahindra Bank:
This bank charges floating interest on home loans. Floating rates the interest rate that changes with the time. Whenever the RBI revised base rate linked to it the final rate of interest rate will also be updated. These rates are following:
|Loan Amount||Rs. 20,000 – Rs. 50 lakhs|
|Loan Tenure||3 Years|
|Processing Fee + GST||0.50% of the loan amount + GST subject to a minimum of Rs.500|
*Rates applicable from September 10 to November 8, 2021 Maximum Tenure: 30 years, Processing fees: 0.5% to 1.00% normally
2. HDFC LTD:
Housing Finance Corporation Ltd is another major player catering a wide range of credit offerings in the home loan market. However one should not confuse HDFC with the HDFC Bank though these are the companies of the same group. It offers various kinds loans for purchase, renovation or extension of houses on with the following rates.
|Category||Best Rate||Highest Rate|
|Self Employed Individuals||6.70%||7.85%|
Maximum Tenure: 30 Years
Processing fees: Up to 0.50% of the loan amount or Rs 3,000, whichever is higher.