Home Loan : Offering Shelter To Your Hopes

Everyone dreams to possess their 'own' home once in their lifetime. It gives them self-accomplishment to become an owner of such a costly purchase which remains only a dream for millions of people in their lives. There are banks and financial institutions which have entered the market so as to fulfill the unrealized dreams of every class of customers. That is why, home loans come into existence.

Home loan is a sum borrowed from any bank or financial institution for buying a house. Home loans consist of an adjustable or fixed interest rate and payment terms. Based on the payment plan, the lender pays a cost of the house to the developer. The customers are required to pay the bank/HFC  equated monthly installments(EMIs) extended throughout the loan tenure.

Normally, the banks tend to assume the savings of the borrowers which constitute around 40%-50% of the net salary that can be used as monthly payment to service home loans.

Home Loan Eligibility

• An Indian resident or Non-resident Indian are eligible to apply for home loans.

• Salaried employees, self-employed professional and self-employed non professional(businessmen) are eligible to apply for home loans.

• An individual need to be more than 21 years of age at the time of home loan application and less than 65 years of age at the time of its maturity.

• Interest rates offered by banks and non-banking finance companies are of two types : Fixed rate and Floating interest rate.

• The minimum home loan amount starts from ₹ 1 lakh and above

• The maximum tenure for a home loan is 30 years.

• The processing fees and pre-payment or foreclosure charges varies from bank to bank and to NBFCs. The processing fee ranges approximately 0.25%-2% of the loan amount.

• Home loans are sanctioned on the basis of the  applicant / co-applicant’s income, age, employment stability, regularity and consistency of income, savings, family background, assets, and liabilities, besides other factors which carry the likelihood of impact on the loan repayment for assessing the loan eligibility.

• One has to make a downpayment of 10-20%  subject to the cost of the house. The remaining amounts mainly a loan-to-value ratio of 75-90% is allotted for a home loan for a house costing from ₹ 25 -75 lakhs.

• The documents required for availing the home loan in India are the proof of age, a residence or identity proof such as a passport, pan card, ration card , voter’s card, water or an electricity bill.

Additional documents :

• Income proof : Six months bank statement or a salary slip of the past three months or the form 16.

• Bank's cheque for the flat booking allotment letter.

• For a self employed/businessmen : Individual IT returns of the last 2 years, Profit and loss account and the audited balance sheet of the past 2 years is mandatory.

• An individual needs to have atleast 2 years of working experience either in the current job or minimum 2 years throughout his/her career.

Home Loan EMI:

EMI is equated monthly installments payable by the borrower every month at a prescribed date to the lender against the loan repayment. home loan EMI calculator by using the following formula:

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

where,

EMI= Equated Monthly Installment ; P= Amount of Principal Loan  ; R= Monthly Interest Rate

N= Number of Monthly Installments

Top Lenders for Home Loan:

Home Loan SBI-

State Bank of India provides several home loan schemes at low-interest rates and the interest is charged on a  daily reducing balance. You can get a home loan from SBI with attractive benefits such as low processing charges, no prepayment charge, and no hidden charges. SBI offers home loan to both salaried and self-employed professionals.

The following are the SBI home loan schemes :

• SBI Flexipay Home Loan
• SBI Realty
• SBI Maxgain
• NRI Home Loans
• SBI PAL
• SBI
• Sahyog Niwas
• Gram Niwas

Home Loan HDFC-

HDFC offers tailor-made home loan schemes for salaried and self-employed individuals at  attractive rates of interest for a longer tenure. It has fulfilled dreams of over 5.4 million customers and has become a household name amongst all Indians.

HDFC Home Loans are offered for the following purposes :

• Purchase of new homes
• Purchase of resale homes
• Construction of new homes or Purchase of property
• Transfer of home loan from another lender to HDFC

LIC Home Loan-

LIC Housing Finance Ltd. offers financial funding to its customers who wish to buy or purchase a house of their own. Customers deploy this money for doing renovations and repairs that are necessary for their flats or houses.

LIC Housing Finance extends housing loans to professionals, who are looking to construct or purchase clinics, or nursing homes or office spaces or diagnostic centers, or for them to purchase any equipment that they require for their work or business.