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A Comprehensive Guide To Avail A Home Loan

Dec 23, 2022

4 min. Read

Authored By: L&T Finance

Home Loan

Here’s Everything You Need To Know About A Home Loan

The world we are living in is not a very affordable one. And that’s why owning a home is a distant dream for the common man. If you are in a similar situation and really want to be a homeowner, your best option would be a Home Loan.

A Home Loan is a facility through which a borrower can get the required amount of funds from a financial institution and pay it back in the form of monthly installments. These monthly installments are popularly known as EMI (Equated Monthly Installment) and comprise a part of the principal and interest amount.

Taking a Home Loan is the most popular way to acquire the necessary funds to buy a house. So, a majority of homeowners usually start their journey with a Home Loan. Experts believe that the compound annual growth rate of the housing finance market will increase by 20.58% from 2022 to 2027. The two main reasons for this whopping growth are rapidly increasing urbanization and mortgage rates that are easy on the pocket. It is also believed that 27% of the applicants are young borrowers below 36 years of age

Explore everything you will need to know once you decide to borrow a Home Loan.

Factors affecting your Home Loan Eligibility

• Income: Your monthly income gives the lender an idea of your financial ability to pay back the loan amount. A stable and steady monthly income plays a positive role in increasing your Home Loan eligibility.

• Credit score: Your credit score helps the lender decide whether trust can be placed in you. A good credit score tells the lender that you are consistent with your payments and a reliable borrower, so they are likely to approve your loan.

• Current debts: If you already have too many debts and existing loans to pay off, it certainly reduces your eligibility because the lender knows you are financially bound elsewhere to pay off EMIs and are likely to get overwhelmed with payments.

• Employment: A stable job is a good sign, as it helps the lender trust you with repayments. Similarly, in the case of a self-employed person, the bank will trust you as a borrower when you have a consistent and steady business and not an unstable one.

How to apply for a Home Loan

Before you apply for a Home Loan, it is very important to check everything with a Home Loan rate calculator. You can check things like your monthly EMI, loan tenure, Home Loan interest rate, etc. using a Home Loan rate calculator. You can apply for a home in the following three ways:

• Online through the website: Visit the website of the lender you want to borrow a Home Loan from and go to the Personal Loans section. Click on "Apply Online". Fill out your form and upload the documents. Submit your form once you have checked all the details you filled in.

• Online through the app: Install the lender’s app on your phone. Sign in using your credentials and apply through the loan application section. Upload your documents and submit the application.

• Offline in the branch: Visit the nearest branch of your lender and fill out a hard copy of the loan application form. Submit copies of your documents to the bank.

Repayment of a Home Loan through easy and convenient EMIs allows you to enjoy the privileges of owning a house as well as living stress-free. The Home Loan facility has helped millions of people make their dreams come true; now is your chance to make your dreams a reality.

Advantages and Benefits of Home Loan

Due to a constant rise in requests for Home Loans most lending institutions have created a hassle-free application and disbursement process for their customers. Be it interest rates or EMI amounts, the lenders are providing the customers with the best possible home loan deals.

• Tax benefits: A Home Loan brings tax benefits with it. You can claim tax deductions on both components of your EMI, that is, the principal as well as interest under sections 80 C and 24 (b) respectively. This limit for the principal amount is ₹2 lakh. However, the limit on the interest amount is ₹1.5 lakh.

• Quick approvals: Availing of a Home Loan is now quick and easy, all thanks to the digital processes. Upon applying online for a Home Loan, most lending institutions will respond within 24 hours. Eligibility and documentation are key factors in this, so, make sure you check your Home Loan eligibility before applying and submit the correct documents.

• Affordable interest rates: The Home Loan interest rate charged by a bank is now extremely affordable. However, it also highly depends on your credit score and your reputation as a loyal customer. A good financial record is an important key to getting the best home loan deal.

• Easy repayment options One of the most important aspects of any loan is repayment. After all, it is a borrowed amount and one must return the same to the lending company. Most banks and financial organizations allow repayment through convenient and pocket-friendly EMIs.

Eligibility for a Home Loan

Home Loan is a huge undertaking. And that’s why the lending company will ensure your eligibility before providing you with the required funds. Being an Indian resident with a regular income is an important requirement. Apart from this having a good credit score is important. Also, your age should be between 21 to 65 years. You can also improve your eligibility if you find yourself ineligible on certain grounds. For example, having multiple income sources, improving your credit score, having a co-applicant, and so on. Various aspects of your financial situation impact your Home Loan Eligibility. Improving these aspects can create a favourable change in your eligibility.

This article is authored by L&T Finance

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