A Home loan is a loan provided by a bank/financial institution to finance the purchase/construction/renovation of a residential property. It is a much sought-after product because often people do not have the required capital to fund their purchase. If you are planning to buy a home, you must know about home loans processes and how to choose the right home loan which is within your budget. Home loans in India have made people Buy Property in India, despite rising prices. Home Loans in India are paid by many banks as bank loan is the most important function of financial services in India. Property Dealers and Real Estate Consultants in India usually recommend to take appropriate Home Loan or Mortgage Loan Counseling so that we can buy apartment in India at an affordable mortgage Rate. Purchasing the home of your dreams is not easy. Especially when you plan to buy a house on loan. Home loan means that you buy a house in installments. In simpler terms when you want to have a home and cannot pay the amount of the lump sum is payable in monthly installments with an interest rate.
Home loans are typically long-term loans, with repayment periods of up to 20 years. The house financed is mortgaged with the bank providing the loan. There is an option of fixed and floating interest rate when one goes in for a bank loan. Residential property prices India have shot up significantly, so many people have no option but to bank on housing loans. A person earning Rs 5 lakh a year will aspire to own a house that costs between Rs 15 lakh-Rs 20 lakh while someone with a pay packet of Rs 20 lakh a year would like to own a big- ger house in a better locality that costs anything between Rs 75-80 lakh.
Housing loans are a good choice to buy residential houses of your choice in the context of the escalation of prices of prime property especially in large cities. The rate of real estate in India has begun to rise in smaller cities also seek shelter and many are finding it increasingly difficult to buy flats, houses, plots, lands and apartments. For a limited income family, housing loans are the only option to owning a dream home
Home Loan Interest Rates in India
Interest rates of Home Loans and mortgage loans is expected to fall further according to analysts who foresee a rate cut by the RBI following the decision by the U.S. Federal Reserve reduce its rates by a significant margin. There are several companies offering cheap home loans to low interest rates. You can appeal against the existing home loans for renovation or expansion, etc. There are many nationalized banks that finance the supply of affordable housing loans in India. India has created a comprehensive database to provide the cheapest loans available in the market.
STEPS TO BUYING A HOME
STEP 1: First find out your budget — how much you can afford. This would depend on your income and monthly expenses. How much is in your saving account to manage down payment. Now try to figure out as to how you are going to pay off your instalments.
STEP 2: Do your homework. Talk to various lending institutions. Compare interest rates, costs and look for a better deal. Go shopping for a loan.
STEP 3: Learn about home buying programs
STEP 4: Before signing papers with any institution you must know your rights.
STEP 5: Zero in on the property that you wish to buy. Keep your wish list ready — what facilities and features you wish to have in your dream home. Go to a real estate agent. Look around. Compare features and cost.
STEP 6: Negotiate with the builder, discuss the process with your agent, make an offer and negotiate until you and the seller both agree to the terms of the sale.
STEP 7: You must get the property inspected. This way you would know about the condition of the home. It will also help you avoid buying a house that may require major repairs.
STEP 8: Now look for homeowners insurance. Go shoppingt for it.
STEP 9: Now get ready to sign papers and close the deal. You must read everything before you sign.
STEP 10: The dream house is yours. Get ready to move in.
Various types of home loans are offered by different financial institutions in india. The borrower must figure out which type of loan is beneficial to him.
Types of Home Loans
- Home Equity Loans
- Home Extension Loans
- Home Improvement Loans
- Home Purchase Loans
- Land Purchase Loans
- Mortgage Loans
Before choosing any home loan option in India, you must consider the following points:
TYPE OF PROPERTY : You should know more about type of property in lieu of which you seek loan. There are loans offered by banks to resident Indians and NRIs for ready property, under construction property, selfconstruction and home improvement.
LOAN TENURE: The loan is offered for a specific tenure. Check out the tenure for loans available in the market. Some loans are available upto 25 years.
REPAYMENT OPTIONS : You must choose between fixed and floating rate loans. Some institutions will provide you with the option of switching from floating rate loan to a fixed rate loan once a year at no extra cost. But do check the facts with the loan providing institution.
NO PENALTY OPTION: Some lenders offer no penalty option. In this you can opt to prepay up to 25% of your loan every year. Pre-payment is allowed after a minimum of 6 months following loan disbursal.
TAX BENEFITS : Resident Indians are eligible for tax benefits on principal and interest components of a housing loan under the Income Tax Act, 1961. Make efforts to avail these, Do check with a home loan expert to understand home loan processes and to avail the best offer on your home purchase.
We made a list of all the important institutions, housing finance some of the top home finance banks providing lowest interest rates.
ICICI Bank Home Loans : Buying your new home is an exciting experience. But without the proper knowledge and guidance can also be a little intimidating. ICICI Bank in India, making the process easier for you – for bringing the most convenient Home Loans facility. So worries about money is the last thing on his mind. In fact, approve your loan even before you have selected the property you want to buy!
IDBI Bank Home Loans : Home sweet home, built their dream. A place to return after a hard day’s work and relax, a place to share precious moments with your family. A place that gives you a sense of belonging. IDBI helps you accomplish your long cherished dream of owning your home without problems through friendly home loans to customers. Introducing the home loan you’ve been looking for. We realize what it means to own your home for you and your family.
HDFC Bank Home Loans : Free housing loans at attractive rates exclusively for NRIs. With over 25 years experience, a dedicated team of experts and a complete package to meet all your needs for housing finance, HDFC Ltd. – our parent company, helps you realize your dream.
State Bank of India : Home is where the heart is! At SBI, we understand better than most – the toil and sweat that is dedicated to building / buying a house and later pride and joy of owning one. This is why our Housing loan schemes are designed to make the process easier to make a choice, at least as funding goes!
PNB Home Loans : GNP comes to you with home loans faster, easier and more convenient for:
- The construction or purchase of flats.
- Purchase of flats on the first power of the tax base of the original allottee. – Carrying out repairs or renovations and additions / alterations to existing house floor.