Home Loans with Best Interest Rates

                                       

From Home Loan, the person can buy their own home. Though, it is the most delicate finance, as the person has to pledge their most valued asset i.e. the house they are planning to buy. Therefore, if the customer is planning to take home finance then, customer should do a thorough study about the loan and loan providers. The customer should compare various lenders on the basis of the loan amount, tenure, processing fee, additional fee and most importantly on interest rate. The customer should choose that lender that gives lowest rate, maximum tenure, maximum amount, low EMI amount and free from penalties, processing fee & additional charges. This article will help the customer in providing information regarding home loans.

Eligibility Criteria

All banks or financial institutions or housing finance companies have their own set of norms or terms and conditions for the eligibility norms. Though, they are almost similar in one or the other way. The customer has to submit various documents according to eligibility norms, i.e. identity proof, age proof, residential proof, employment details, income proof, latest bank statement and property documents.

The banks verify these documents and decide the loan amount, interest rate and tenure according to these documents and customer profile. The banks provide the loan amount only up to80% of the house market value and also consider the person’s net monthly salary, i.e. 40-50% as an EMI amount while deciding the amount of home finance. The banks give this finance for a longer period normally 15-20years and charge interest rate around 10-16%, which entirely depends upon the loan amount and customers profile, i.e. financial position, source of income, creditability and repaying ability.

The person can apply home finance for various reasons, such as, for construction of home, for extension of the house, for house renovation, for purchase of plot or flat or home, etc. The home finance cost not only involves the interest rate but also other charges such as processing fee, annual maintenance charges, penalties and many more charges.

The processing fee is the fee which is non refundable fee, which all banks or financial institutions or housing finance companies charge to the customer. This fee varies from 0.5% to 4% of the amount of home finance. The banks charge this amount for the processing of the loan application, and it is usually charge while submitting the application form. The person should also check the prepayment charges, as many lenders still also levy charges on the prepayment.

Basic Rules of Home Loan

                                            

Home is like a heaven for every person where person get peace of mind and relaxation. The increasing prices of realty sector has made tough task realize this dream. Though, home loan is a path with which one can easily realize their dream.

Types of Home Loan

The person can avail various types of home loan, such as home purchase loan, bridge loan, home conversion loan, refinancing loan, NRI home loan, land purchase loan, home construction loan and so on.

Interest rates of Home Loan

The person can avail home loan at a fixed rate or floating rate or teaser rate.

1.      Home Loan at a fixed rate

Fixed rate means that the rate is stable or fixed for the complete tenure. This is so; it is not affected by the market interest rate. Therefore, the customer does not have to care about the market rate. Though, in reality, all banks or financial institutions give clause that they can reset the interest rates at any time during the tenure.

2.      Home Loan at Floating rate

Floating interest rate means that the rate which varies with market variation, i.e. it is not stable. It is also known as adjustable rate or variable interest rate.

3.      Home Loan at Teaser rate

Teaser interest rate means that the rate initial years will remain fixed and that too at a low rate interest which is below the market rate. After completion of honeymoon period, the banks convert the loan interest rate at a floating rate and also match the rate with the market rate.

Documentation

1.      Application form to be submitted which is duly signed by the customer.

2.      Identity proof

3.      Age proof

4.      Residential proof

5.      Income proof

6.      Bank statement

7.      Employment details

8.      Processing fee Cheque

9.      Property documents

Processing Fees

The banks or financial institutions charge a processing fee on the applicant loan application for the processing of the application. The banks charge a processing fee around 0.5% to 4% of the home loan amount. This fee is nonrefundable fees.

 Eligibility Criteria

The banks or housing finance companies or financial institutions provide the finance only up to 80% of the house market value. The bank also gives loan on the customer’s profile, i.e. source of income, credit worthiness, repaying ability and financial position. The banks only consider 40-50% of the net monthly income as EMI amount while deciding the home finance amount.

Things to Check before Applying for Home Loan

                                      

In India, many banks, financial institutions and housing finance companies provide home loans to the prospective consumers. There is remarkable growth among the customers of the home loan, as mostly people take home finance for purchasing their own home. The person can avail this finance for the purchase of land or plot or commercial property, for construction of the house, for renovation purpose and extension of the house.

The customer should try to avail the home loan through the reputed bank or institutions. However, it requires thorough study at the initial stage and later the customer ripe its fruit, in the form of by getting the best deal for home finance. The person can do it by searching it online and comparing various loan providers. The customer should do comparison in terms of interest rate, loan amount, loan tenure, loan EMI, processing fee and additional charges. The customer should finalize that dealer that provides home finance at low EMI amount, low interest rate, low or free from processing fee, maximum tenure, maximum amount and easy norms. The customer should also check the prepayment charges and hidden charges.

The customer can also negotiate with the bank or financial institution; for availing home finance at low interest rate. This is possible if the customer has strong financial position and excellent credit score. The customer has to submit various documents for showing their financial position and creditworthiness. The customer has to furnish personal details and has to provide residential proof, identity proof and age proof for showing their creditability. The customer has to provide income proof and employment details for showing the person’s financial position and repaying ability.

The banks provide finance only up to 85% of the home value. The banks consider only 40-50% of the net salary while deciding the loan amount. Banks normally give this loan for longer duration, i.e. around 15-20 Yrs and that too at reasonable interest rate, i.e. 10% to 16%. This is because; the home loan is a secured loan. The person has to submit the original property documents after the person get approval for the home loan, as banks then only disburse the amount. The person can avail this finance for various purposes, and that too at a reasonable rate, as there are a lot of lenders who provide home loan and competition is tough among the lenders. Therefore, they provide home finance with lucrative benefits and reasonable interest rate.

The customer should read the documents carefully then only sign the agreement, as customer might have to repent at later stage of life.

Things to be cared of while Applying Home Loan

                            

If the person is planning to purchase home in India with Home loan then, person should consider some of the points that will be discuss in the article. The person must know about the home loan approval, but here are the some points that can help the customer in availing the bets home loan deal.

1.      Interest rate

This is one of the critical factor that person must consider while applying for the home loan. The person must know that all banks or financial institutions have a different set of norms, so their interest rate also differs. The person should do research about it by the internet and compare interest rates of different lenders. The banks normally charge around 10% to 16% interest rate. It will help the customer in availing the best rate home finance.

2.      Loan Amount & Tenure

The customer should also consider the loan amount and loan tenure while finalizing the dealer. The customer should see that the person is getting the adequate amount and that too with the maximum loan tenure. The banks provide the loan amount only up to 85% of the home value and for the tenure of 15-20Yrs. The bank considers 40-50% of the net income of the customer while deciding the home finance.

3.      Documentation

The customer should submit all the documents properly, as a bank or financial institution can take action against the fake documents. The customer has to submit, residential proof, identity proof, age proof, income proof, property documents, employment details, 6 month bank statement and two passport size photographs.

4.      Eligibility Criteria

The customer must have minimum age of 21yrs in case of salaried and 23yrs in case of self employed. The maximum age or maturity of the loan can be up to 60 yrs in case of salaried and 65yrs in case of self employed. The customer must have strong profile, i.e. credit worthiness, regular income source, repaying ability and financial position. These are mandatory if the customer want to get home finance. However, these criteria differ from bank to bank.

The person should also remember that bank or financial institutions always charge the processing fee which is 0.5% to 4% of the home finance. This is an addition of the interest rate and the bank also charge prepayment charges, i.e. around 2% of the home finance; though RBI has given guidelines not to charge the customer if customer do prepayment.