Home Loan
Home Loan is a mortgage facility offered by lenders to borrowers for various housing needs such as purchase of a new home, under-construction home, land or plot for building a house or renovating an existing home.Â
Benefits of Home Loan
- Home Loan is provided at interest rate starting from 6.70% p.a. and a tenure that is up to 30 years.
Lower rate of interest: The interest rate on a house loan is cheaper compared to other loan options. If you’re having trouble making ends meet, refinancing your house loan is a cheaper option than taking a personal loan.
Long repayment tenure: Mortgage loan repayment periods are quite lengthy, generally lasting between 25 and 30 years. This is because taking out a mortgage requires a significant amount of debt.
Repaying the principal and interest over a longer period will lower the EMIs.
Tax Benefit : There are Tax Benefits on repayment of a Home Loan both on ‘Repayment of Principal Amount’ and ‘Repayment of Interest’ on Home Loan.
Characteristics of Home Loan
- Purpose:Â For resale or construction, purchase of fully constructed house from builders, extension or renovation of existing house.
- Loan Amount: Home loans amount totally depends on the requirement; however there is limit is loan amount which is ranging from Rs.2 lac to Rs.200 lac, and this is calculated on applicant’s eligibility, repayment capacity and income.
- Security:Â All home loans are secured wherein collateral is a must.
- Loan Tenor:Â 20 years is the maximum loan tenure offered for home loan.
Home Loan - Eligibility
| Eligibility Criteria | Requirement |
| Age | 21-65 years |
| Resident Type | Indian |
| Employment | Minimum 2 to 3 years of Experience |
| Net Monthly Income | 10,000/- for salaried and 15,000/- for self-employed |
| Credit score | A good credit score of at least 650 or more |
Types of Home Loan
Home Construction Loans
- Home loans are given to those people who are likely to build a new house in the way they desire instead of buying a property that has been already constructed. The process in which home construction loans are obtained is slightly different from that of the common loans provided for housing. When applying for home construction loans the borrower must have an idea of the cost that will incur and apply for the loan accordingly.Â
House Improvement Loans
- House improvement loans are those that are provided when a property has to undergo renovations and other repair works. The kind of expenses that are covered under this includes painting works, repair works both internally and externally, electrical work, plumbing works, waterproofing the house and also when constructing underground tanks or overhead tanks.
Land Purchase Loans
- As the name itself mentions, land purchase loans are provided in order to buy lands or plots. These loans are provided for both investment purpose and also residential or housing purpose. The banks provide upto 85% loans when purchasing a plot or land. These loans are mostly taken in order to build a house.
House Purchase Loans
- One of the most popular and commonly availed loans would be home purchase loans. These loans are used when a person buys a property from another owner. It is also necessary to take adequate care in buying properties from another owner. The loans are given on both fixed and floating interests or even as hybrid loans. These kinds of hybrid loans are the ones which include floating interests and fixed interests combined in an ideal way.Â
House Extension / Expansion Loans
- Expansion or extension loans for homes are given out when people tend to expand or extend their present house. This includes addition of an extra bedroom, living room, a bigger bathroom or a new floor or a space for balcony. It is nothing but the modification in the structure of a house.
House Conversion Loans
- These are the loans that are provided to such people who wish to move into another home with the existing loan. If incase the person wants to move into a new place they have an option of moving by paying some extra amount or pre-payment on the prior loan. When this is done there is no need of paying loan for the previous home.
EMI Calculator for Home Loan
A home loan is better than other loans because it helps you save tax and build an asset. Housing is one of the most basic needs for humans along with food and clothing. Every youngster strives to build a house and makes it the first priority. This is preferred over other expenditure in household and basic needs. Housing is a major investment that allows a family to cut down on much other expenditure. The potential homeowner must first look out for the family’s monthly income and then look out for a loan which is generous so that he need not spend his entire life repaying the loan.
Calculate Your Home Loan EMI
Home Loan EMI calculator is a basic calculator that helps you to calculate the EMI, monthly interest and monthly reducing balance on the basis of principal amount, loan tenure and interest rate
The formula to calculate EMI for a Personal Loan is:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
- P represents the principal loan amount
- R represents the monthly interest rate, calculated by dividing the annual rate by 12 and converting it to a decimal.
- N denotes the loan tenure measured in months.
Calculate Your Home Loan EMI
Home Loan EMI calculator is a basic calculator that helps you to calculate the EMI, monthly interest and monthly reducing balance on the basis of principal amount, loan tenure and interest rate
The formula to calculate EMI for a Personal Loan is:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
- P represents the principal loan amount
- R represents the monthly interest rate, calculated by dividing the annual rate by 12 and converting it to a decimal.
- N denotes the loan tenure measured in months.
Feel free to use our Equipment Finance Calculator
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| Period | Payment | Interest | Balance |
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Documents required for Home Loan
- Employee Identity Card
- 3 Months Salary Slip
- 6 Month Bank Account Statement
- Duration of Employment Evidence
Self-Employed Individuals:
- PAN
- Trade License
- Partnership Deed
- Article of Association
- Memorandum of Association
- Import Export Code
- SEBI Registration Certificate
- ROC Registration Certificate
- Financial Statement Audited by CA
- Profit & Loss Account Statement
- Balance Sheet
- 6 Months Bank Account Statement
- Professional Practice License for Doctors, Consultants, etc
- Registration Certificate of Establishment for Shops, Factories, and Other Establishments
- Business Address Proof
Documents Required from all Non-Resident Indians (NRIs) Applicants
- Income Proof Documents for NRI
- Property Papers
- Property Documents
- Sale Deed
- Stamped Agreement of Sale
- Allotment Letter
- No Objection Certificate or NOC
- Housing Society
- Builder
- Possession Certificate
- Land Tax Receipt
- Construction Cost Estimate
- Bank Account Statement of Payment Made to Seller or Builder
- Payment Receipt of Payment Made to Seller or Builder
- Incase of resale property share certificate is required
- Occupancy Certificate
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A home loan, also known as a mortgage, is a loan provided by a bank or financial institution to help you purchase a home. The loan is secured against the property you buy.
To qualify for a home loan, you typically need to have a stable income, a good credit score, and a low debt-to-income ratio. The exact requirements may vary between lenders.
A fixed-rate mortgage has a fixed interest rate for the entire term of the loan, which means your monthly payments remain the same. An ARM has an interest rate that can change periodically, usually after an initial fixed period, which can result in changing monthly payments.
The minimum down payment required for a home loan depends on the lender and the type of loan. It is typically between 3% and 20% of the purchase price of the home.
Make part-pre payment or increase EMIs.
As per the guidelines issued by the Reserve Bank of India (RBI), no lender can disburse a 100 percent loan to any applicant. In most cases, banks can sanction up to 80 percent of the total value of the property.
The cost of a home loan is directly proportional to the loan tenure. With longer tenure, the EMI amount decreases; however, the interest paid goes up. Shorter tenure means higher monthly payment but lesser interest amount. Having a short tenure significantly reduces the overall loan cost.