Home loans in India: Interest rates, Eligibility and documents required.

A home loan is a loan or financial assistance from banking or other financial institutions to purchase, construct or renovate a housing property. Normally, financial institutions provide the best housing loan as a mortgage on the home that’s collateralized by the loan. In the case of non-payment of the amount of the loan, the lending company has the right to seize the property after sending a legal notice. 

These are long-term loans that are offered up to 30 years in duration and not less than 10 years in duration. The longer the tenure, the lower the EMI. Opting for a home loan is a good option as it reduces the burden of paying the entire amount of money all at once while purchasing a housing property. People can now buy the house of their dreams with easy monthly instalments thanks to home loans.

Several financial institutions offer home loans at different interest rates according to the nature of the loan. In order to apply for home loans, one has to first check the eligibility criteria and the interest rates of different banks and NBFCs according to the nature of the loan they are looking for. While deciding on your home loan, do an eligibility check on factors such as your salary/ITR, property check, professional background, credit profile, and family credit history. These factors play a crucial role when availing of a home loan. 

After checking the eligibility criteria, compare the interest rates of different financial institutions and choose the low interest home loan, as it will lower the financial burden and make it easy for you to pay the monthly instalments.

Banks such as SBI, HDFC, AXIS, KOTAK, ICICI, and PNB offer home loans at 7.40% p.a. onwards for tenures up to 30 years and the loan amounts of up to 90% of the property’s cost. There is a complete process of applying for instant home loans, which are generally similar in all financial institutions but may differ according to the nature of the loan, which includes eligibility criteria, documents required and interest rates. 

Applying for home loans is no longer a hard nut to crack, as one can apply for home loans online instantly after completing the application process on the lender’s website. Along with banks, NBFCs such as NAVI are providing the facility of home loans. 

A home loan is an easy option for buying a housing property. If you’re planning to apply for a home loan, ensure you have detailed knowledge of the eligibility, interest rates, and documents required for the application beforehand. 

Home loan eligibility factors:

Home loan eligibility criteria are different for salaried and self-employed. These factors play a vital role while deciding the amount of the loan. These differ from lender to lender.

1) Monthly Income: Your monthly income determines whether you will be able to repay the loan or not. In the case of self-employed, your annual profit will decide whether you will be able to repay the loan.

2) Qualifications: Your qualifications, to a more significant extent, give an impression of your financial stability, which decides your loan repayment eligibility.

3) Age: Age is a crucial factor as, to apply for a loan, one has to attain the minimum age of 21.

4) Spouse’s income: Having your spouse’s income increases the amount of income that you will be eligible to borrow in order to be approved for a home loan.

5) Stability and continuity of occupation: Your job stability and continuity are really important for your eligibility because if you have a stable job, you can easily pay back the debt.

6) Savings and credit history: Your savings and credit history are crucial in deciding the loan amount. Credit card companies generate this report. Based on this report, a credit score is given.

All these factors play a significant role in getting the apt amount of loan. Considering these factors, one can easily get the best home loan

Interest rates:

You should pay close attention to the interest rate because it will affect how much you can afford to borrow for a property. Think about the sort of interest you choose in addition to the interest rate. Home loans can either have a fixed interest rate or a fluctuating interest rate.

1) Fixed interest rate: This interest rate does not alter in response to fluctuations in the market. In other words, the interest rate won’t change for the duration of the loan. If you go this route, it will be simple to plan for your monthly EMI payments. This rate is fixed for the duration of the loan; thus, the financial institution will likely charge a greater interest rate than it would with a floating rate loan.

2) Floating interest rate: Rates of interest on floating-rate loans fluctuate over the life of the loan in response to fluctuations in the underlying market. If the interest rate reduces, your EMIs will go down, but if it goes up, your EMIs will go up. The EMIs cannot be predicted with complete accuracy at the current interest rate.

Considering both the interest rates, one can compare and choose the most suitable home loan for themselves.

Documents required for a home loan:

The documents required for applying for a housing loan vary depending on the nature and requirements of the loan. 

The financial institutions require the following documents to process your loan application:-

  1. Income,
  2. Age proof,
  3. Income proof,
  4. Bank statement,
  5. Passport size photographs

These documents are different in the case of salaried and self-employed. To get the application approved, one needs to present these home loan documents to the lending institutions beforehand.

Conclusion

A home loan is a critical yet necessary decision in our lives. It is probably the biggest loan one takes. Before you finalize the financial institution through which you are availing of the loan, make sure you have enough knowledge and information about the current interest rates. Find out the eligibility for different institutions. Find out whether fixed or floating interest rates are favourable for you. An ideal and cheapest home loan is one that helps you acquire a tangible asset that you can appreciate in the long run at lower interest rates.