Buying your own home has always been a huge part of the Indian Dream and it is always a good idea to buy property, either as an investment or as a place to live. But it is also a big investment and more often than not, it is better to purchase it by availing the facility of a home loan. This allows you to avail tax breaks as well as allows you to pay the loan back in different ways based on the terms of the loan while purchasing.
Housing loans are mainly of two types, fixed and floating. Fixed loans have a higher down payment but the period of repayment is longer and interest rate are fixed. This usually translates to lower monthly payments and insulation against the possibility that interest rates may rise in the future. Conversely the floating rate may have a lower rate of interest initially but then the interest rates may be revised after some fixed period and then the rates may be revised periodically.
Moreover, there are certain charges that banks apply like the prepayment charges, processing fees, pre closure fees and some others, depending on the bank issuing the loan.
Property as an investment has been one of the fastest growing investment opportunities for a number of people looking for a long term investment at a good rate of return. However, as the property rates keep climbing each year, it is getting more and more difficult for regular folk to cough up the entire amount needed to purchase a house upfront. This is where home loans step in and save the day for countless numbers of people who could probably never afford to buy real estate otherwise.
In a lot of families it is considered a necessity to have a home soon after you start your career and as such it is not always likely that you can afford to pay up the entire amount needed to purchase it upfront. In such cases, the banks help you by stepping in and paying up to eighty percent of the purchase cost that you need to pay them back with some rate of interest over a suitably long period of time.
This serves as a great deal for both the parties involved as the bank earns a decent interest on the amount loaned over a long period of time and you, as the customer gain ownership of your own property that you need to pay for back in small amounts over time, while still getting tax benefits and maybe even a secondary income source if you put it up for rent.
The features of your particular home loan depends on your agreement with the bank. However based on RBI guidelines and the common features across home loans offered by banks, here are a set of common features regarding home loans:
Home Loans are a large investment and require collateral by the bank. Moreover each bank has a different set of requirements as they deem necessary for applicants and as such your experience may vary across banks.
Depending on the bank that you apply to, the list of documents that you are asked to submit may differ. Most banks however, will ask you to at least provide the following documents when you apply for a home loan and so you should keep these handy while applying.
We at BankingOnTips are committed to helping you find the perfect home loan that suits your requirements best from a wide range of possible options based on various factors like type of interest, different interest rates, type of loan and many more. We try and show you the loans that you may be eligible for and help you to compare and contrast them to find the one that suits you best and once you zero in and decide to apply for one, we will direct you to the concerned bank’s website for application request and further formalities.
Home loan is a monetary assistance you get from banks to buy yourself and your family a house. You need to repay the amount either in equal installments or EMIs along with interest and other legal taxes.
Yes, most of the times, you have to physically visit the bank/loan issuer for the home loan application process. Also, banks send their representatives to you in some cases.
Not particularly. You get 80-85% of the total amount. Rest amount has to be paid by the beneficiary as down payment. This ratio changes as per the scheme offered by the builder or the bank in association with them.
Repayment begins after the beneficiary gets the loan amount. If banks have released partial payment, the borrower has to pay the amount partially, in some cases.
Yes, almost banks allow the beneficiaries for pre-payment options. Most of them charge a fixed fee for pre-payment of the loan amount.
The loan amount is sanctioned as soon as your application process is completed and approved by the concerned department.
You can get tax benefits from home loans. Principal and interest components of the home loans attract tax benefits as stated in Section 24 (1).
You can think this way, either buying a home is beneficial or not? Surely, it is. Any property either brought with home loan or not, is definitely a good investment as far as long term benefits are thought upon.
Yes, home loan is considerably a big amount and so, you may be asked to provide your property papers, other property papers, FD documents, LIC documents etc as security with the bank.
You will need to furnish your identity proof, address proof, bank statement, salary slips, duly filled application form, Form 16 (if required).
Yes, banks may give you home loan for the renovation or construction of your house as per the scheme of different banking institutions.
You can repay the loan amount in equal installments through cheque/cash, NEFT, RTGS, IMPS etc.
Yes, banks do charge processing fee as it is a part or home loan. Loan gets expensive if processing fee is higher. You may get home loan with zero processing fees. You must check and compare from a range loan providers.
If you have submitted your property papers to the bank while availing home loan, those will be returned to you as soon as the entire loan amount is repaid by you to the bank.