An Essential Guide to Housing Loan
Ever seen a weaver bird at work? It is believed that a male weaver bird takes 18 days and 500 odd trips to build his nest. Fortunately, it’s much easier for us humans to build our safe haven, isn’t it? We have the convenience of contractors, builders and of course, a Housing Loan! In these times of constantly increasing cost of living, a Housing Loan is your best option to realise your dream of buying a home.
Types of Housing Loan
A Housing Loan, that is the funds borrowed from a financial institution to either buy a new home or construct one, can be of different types. For example, you can get a Housing Loan for home improvement, home repair or even home renovation, depending upon you need:
• Composite Loan:
This loan is for borrowers who want to purchase a plot and later construct a house on it.
• Loan for Buying a House:
This type of loan is suitable for borrowers who want to buy a ready-to-occupy house.
• Loan for Home Expansion:
If you are looking to expand your house by adding an extra bedroom or a garage, this type of loan is for you.
• Loan for Home Repair:
This type of loan can be borrowed when you are looking for funds to repair your home or redo the interiors.
Eligibility for a Housing Loan
Before you apply for a Housing Loan you must find out whether you are eligible for one. Here is the eligibility criteria you need to fulfill to be eligible for a Housing Loan:
• You should be an Indian resident
• You should either be salaried, self-employed professional or non professional
• Your age should be 23 years to 62 years upon maturity of loan
The loan amount you are eligible for depends on various factors such as your age, income, credit score, repayment capacity, asset owned, etc. You can improve your eligibility by increasing your credit score, as this shows you are a reliable borrower.
Documents required for a Housing Loan
Here’s a list of documents you will require for a Housing Loan:
• Age proof: PAN card or Aadhar card
• Address proof: rent agreement, passport, driving license, etc.
• Photo Id proof: PAN card or Adhaar Card
• Income Proof: Salary slips of previous months or ITRs of two months, Bank account statements, etc.
Housing Loan Interest Rate
A Housing Loan Interest Rate is one of the key factors to consider when applying for a Home loan. Any loan is comprised of a principal and interest component. A certain percentage on your principal amount is charged as interest. This in short is the Housing Loan Interest Rate. Here are different types of Housing Loan Interest Rate offered:
• Fixed Interest rate: If you choose this type of interest rate, it will remain constant throughout your repayment tenure. It does not change with the change in market conditions, but is slightly higher than the floating rate option.
• Floating interest rate: A floating interest rate is dependent on market conditions and keeps changing from time to time. If you choose a floating interest rate, you will be exempt from foreclosure charges
• Mixed Interest Rate: This is when for a certain number of years at the beginning of your loan tenure your interest rate is fixed and then it changes to floating.
Charges of a Housing Loan
Although it is easy to borrow a Housing Loan, you must pay some fees and charges to get the amount from a bank. Here is a list of all the fees and charges you need to pay to obtain a Housing Loan:
• Processing fee: It is 3% of the sanctioned loan amount
• Documentation fee: It is charged as per actuals
The other fees and charges depend on your situation; for instance, foreclosure and prepayment charges depend on which type of interest you have chosen or how long you have been paying the EMIs.
Housing Loan Calculator
A Housing Loan Calculator is an essential tool to use when you are borrowing a Housing Loan as it will let you know all the things you must consider before applying for a loan. You can use it to find out the monthly EMI amount, Housing Loan Interest Deduction, loan tenure etc. It is highly recommended that you use a Housing Loan Calculator before you actually apply for a loan to make an informed decision.
A Housing Loan is an excellent service offered by banks that enables the common man to borrow sizable funds and build the home of their dreams. What are you waiting for? Borrow a Housing Loan today and build a sanctuary for you and your family.
L & T Finance provides Housing Loan with low-interest rates to their customers. If you are looking to avail of a Housing Loan, apply now!