What is Home Loan?

 What is Home Loan?

Everyone dreams of buying their own house. Everyone wants to have a cheap and nice house. Customers also take loans to buy houses and flats for the construction of plots or renovation. If you are also planning to buy your home and consider taking a Home Loan, you have to plan how much you have to take, the EMI amount, etc.

How much loan should customers get? 

If you also want to take a loan to buy a house, you first must assess how much your income is. Banks give loans according to your earnings. According to the ease with which you can repay the loan, banks offer the loan amount. That is, your monthly income depends on matters like expenses and income of family members, assets, liabilities, and stability in income. 

What is the maximum home loan a customer can take? 

While buying a house, customers have to make a down payment of 10 to 20 percent of its value. After the down payment, up to 80 to 90 percent of the house’s value, the customer can take a home loan. This price also includes charges such as registration and transfer. 

Is a co-applicant required for a home loan? 

In most cases, a co-applicant is required for a home loan. Any person from the family of the owner of the house can be a co-applicant. On the other hand, if the house is in the name of two people, then it is necessary to include the name of both in the home loan as well.

How will you get the Loan Amount?

The loan amount is given to the customers in a lump sum or installments. If you get this in installment, you will get the total amount in a maximum of three installments. If we consider ready-to-move properties, the loan amount can be benefited in a lump sum. However, if your property is currently under construction, the loan amount is disbursed to the customers as per the construction progress. In such a situation, the customer can agree with the bank to give the home loan amount to the builder according to the construction. 

What Documents are Required for a Home Loan? 

These are the documents you need to submit with the application form- 

  1. Identity Proof
  2. Residential Proof (Aadhar Card, Passport, Driving License, Electricity Bill, Ration Card, etc.)
  3. Proof for age (Aadhar Card, Passport, Driving License, PAN Card, etc.)(Age proof)
  4. Salary Slip of last six months along with Form 16 or Income Tax return

For this, some institutions also ask for a mortgage or life insurance policies, share papers, NSC, mutual funds, bank deposits, or other investment documents. 

What are the types of interest rates? 

For the interest rate for the loan, you can choose between a fixed-rate loan and a floating-rate home loan. On a fixed-rate loan, your EMI does not change for the entire loan tenure. This can be substantiated to be beneficial as interest rates are likely to increase going forward. Whereas in floating rate, the interest rate of your loan is decided based on the floating rate along with the base rate. In such a situation, the fluctuation of the base rate affects the EMI. This is effective when interest rates are predicted to come down in the future. 

How to decide which lender to take a loan from? 

If you also want to take a loan, first compare the many loan options available. Do consider all those options once. You should also pay attention to whether the lending institution is government owned or private. Along with this, it is also necessary to keep in mind which institution is giving you a loan on how much interest and on what terms. 

What is a Home Loan Calculator? 

Home Loan Calculator is an online tool through which customers can calculate EMI. That is, you can know sitting at home how much the EMI of your loan will be. 

How to use a Loan Calculator? 

To use the Home Loan Calculator, you need to enter the following information- 

  • First, you have to enter the loan amount.
  • After the amount, you have to enter the tenure of the loan.
  • Now you have to enter the interest rate at which you are getting the loan.
  • After entering this information, you will get the information related to the loan, such as monthly EMI, total loan repayment amount, etc.

How can you lower the tenure of the loan?

You can reduce the tenure of the loan through part prepayment. It is called a partial payment when you deposit any amount in the home loan account other than the regular installment. This amount reduces your principal amount. In this case, the interest component of your installment amount gets reduced, and your loan tenure may get reduced.

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