For most people, purchasing a home is a once-in-a-lifetime opportunity and an expensive undertaking. Giving such a dream life needs a lot of effort on the purchasers’ behalf, and the easiest way to fit a property into their budget is to take out a Home Loan.
A home loan is a secured loan used to purchase a home with the property as collateral. Home loans give high-value money for lengthy periods of time at cheap interest rates. EMIs are used to repay them. The borrower acquires the title to the property after the debt is repaid.
Housing Loans are available from a variety of public and private banks as well as housing finance firms, and they allow you to borrow money to buy the home of your dreams while repaying the loan in monthly installments.
You can acquire financing for up to 75 percent to 90 percent of the house’s market value. The lender will keep the house until the loan is entirely paid off.
The remaining amount, which represents the owner’s equity or shares in the property, must be paid for out of the borrower’s funds. As a result, when applying for a home loan, this is a crucial factor to consider and plan for.
A home can be taken for the following reasons:
- To purchase a house or flat that is either under construction or has already been built.
- to purchase a piece of land on which to build a house
- constructing a home on land you already own
- Existing house renovations, extensions, and repairs
- Purchase a stand-alone house as well as the land.
Application process for Home loan
With the advent of technology, obtaining a home loan has been easier than before, thanks to the different channels that are now available. The bank gathers the relevant paperwork from you when you apply.
It starts the process of processing your application, which includes assessing your CIBIL score, asset value, and eligibility computation based on your income and liabilities, among other things.
The banks determine whether to approve or refuse the loan after analyzing and verifying all of the papers. To apply for a loan, you can use any of the following methods:
- Online Application: Almost every bank provides an online application feature. One can apply for a home loan through the bank’s website or mobile application. You have the option of using a digital and contactless application if you have chosen the financier. The assessment’s needed documents can also be uploaded and submitted online.
- Branch: You can submit your application with the help of a branch staff member at any branch of your bank/financier. If you happen to be an existing account holder at the bank where you are applying for the loan, you can also seek assistance from any Relationship Manager.
- Sales Agent: You can approach a financial or loan consulting agency and apply through them; however, it is always preferable to approach the bank/institution through the direct routes mentioned above, as you will not be required to pay any handling fees to the agent, and dealing directly with a Bank Representative will provide greater transparency.
Required Documents for Home Loan
When you apply for a home loan, you must include the following documents with your application. This may differ depending on the institution to which you are applying; nevertheless, the following documents are often requested based on your profile/source of income.
Salaried Persons
- Application form with photographs
- Identification and evidence of residency are required.
- Bank statements for the last 6 months
- Salary slip for last 3 months
Businessman Or Non Salaried professionals
- Application form with photographs
- Identity and residence proof
- Bank statements for the last 6 months
- Educational qualifications and proof of business
- Past 3 years Income tax returns
Benefits of home loan
There are numerous advantages to taking out a Home Loan and using it to finance your property. Even if you can afford to fund the acquisition with your savings or other types of market borrowing, it is advisable to obtain some part of the property as finance through a bank/financial institution:
Tax Benefits of Home loan:
The most significant advantage of a home loan is the ability to deduct interest and principal repayments from your taxable income.
You can claim up to Rs 1.5 lakh as a principal repayment under section 80C, up to Rs 2 lakh as an interest repayment under section 24B, up to Rs 2 lakh as an interest repayment in unusual circumstances under sections 80EE and 80EEA, and up to Rs 1.5 lakh as stamp duty expenditures under section 80C.
Property due diligence:
When you buy a house through a bank, the bank will do extensive legal checks on the property and ensure that all of the documents issued are valid. This due diligence examination on the bank’s part will lower your chances of getting conned. If the property is approved by the bank, you and your home are safe.
Lower Interest Rate Home loan
The interest rate of the home is less compared to other loans. A home loan has a larger repayment period compared to other loans so the monthly EMI is less. We can calculate the monthly EMI using the home loan EMI calculator. Every bank provides an EMI calculator on its website.
Long repayment tenure
Home loans, unlike other types of loans, have a lengthier repayment period of up to 25 to 30 years. This is because purchasing a home needs a big debt. If we choose longer tenure the monthly EMI will be less but the total interest rate will increase. We can also do pre-payment or pre-closure, it will help to reduce the interest rate and we can close the loan much faster.
To Up Opportunity
If you’re short on funds, a top-up on your existing Home Loan at a lower interest rate than a Personal Loan could help you out. The process is faster and less expensive than any other type of Unsecured Loan because the property has already been verified and mortgaged to the bank.
Conclusion
A house loan may be able to help you fit your dream home into your budget. You can acquire financing for up to 75 percent to 90 percent of the house’s market value. Thanks to Internet Banking and mobile applications, getting a home loan has never been easier.
There are numerous advantages to taking out a Home Loan and using it to finance your property. Reduce your monthly outlay by taking advantage of cheaper interest rates and longer terms.
You will also benefit from tax advantages on interest and principal repayment. When you buy a house through a bank, the bank will do extensive legal checks on the property and ensure that all of the documents issued are valid. If the property is approved by the bank, you and your home are safe.
