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.