What is home loan?
Also known as housing finance in India, home loan is one of the most prominent and helpful loans when needs arise. This is a very reliable tool to buy new house or land of property or even to make some renovations to existing house. Banks or financial institutions in India offer different types of housing finances to suit particular needs of individuals.
Things to understand in borrowing home loan in India
Have impressive credit record
Believe it or not, the bottom line is that if you don’t have good credit record, you will not avail housing finance. If you have been blacklisted or defaulted payment of outstanding loan in past, it therefore leaves a mark on your credit. These things conclusively represent your credit record being bad and unreliable. It therefore makes any lender hesitate to lend out you big amount of loan. Many borrowers face outright rejection of their loan application because of bad credit record.
Home loan repayment capacity
It is your responsibility to convince your lender that you are perfectly capable to afford the loan and that you will not default the payment in future. For this, you will be required to give the lender documents and credentials that can substantiate the repayment capacity. A full-fledged Bank statement records, salary slip and other financial documents will be asked to submit in this context.
Fees and penalties involved
You should keep abreast with fees and penalties that a bank charges when lending out home loans. Processing fee is the first thing to consider in this regard. Normally, the rate of interest on processing fee varies from 0.1% to 2% on the entire loan amount. Some banks extend this charge up to 5% making the loan a bit expensive for borrower.
Prepayment penalty is one of the other things to consider. This sort of charge is applicable when a borrower prefers loan disbursement before the tenure of the finance expires. The rate of interest on prepayment varies from 1% to 3% depending upon the market condition and bank’s respective policy.
Late payment penalty comes into force when a borrower does not pay the loan on time. Interest rate on late payment may vary from 1% to 5% depending on a bank’s policy.
Documentation policies
Policies of home loan banks regarding documentation vary from one another. However, if you are salaried person to go for housing finance, you will basically be asked to provide salary slip, bank statement and the credentials proving your current income. On the other hand, if you are self-employed individual, you will be asked to provide business continuity proof, residential address proof, income proof and age proof. They are mandatory documents and need to be duly submitted after application letter regarding the housing finance having been served.
In conclusion, if you want to borrow home loan in India, you need to follow various things.
Home loan is one of the best loans to buy new house or renovate your own home. The loan can be obtained from a bank or lending institute. However, there are many things that a borrower has to follow in this context. Borrowing a home loan is all about making an intelligent decision to solve various monetary issues.
Also known as housing finance in India, home loan is one of the most prominent and helpful loans when needs arise. This is a very reliable tool to buy new house or land of property or even to make some renovations to existing house. Banks or financial institutions in India offer different types of housing finances to suit particular needs of individuals.
Things to understand in borrowing home loan in India
Have impressive credit record
Believe it or not, the bottom line is that if you don’t have good credit record, you will not avail housing finance. If you have been blacklisted or defaulted payment of outstanding loan in past, it therefore leaves a mark on your credit. These things conclusively represent your credit record being bad and unreliable. It therefore makes any lender hesitate to lend out you big amount of loan. Many borrowers face outright rejection of their loan application because of bad credit record.
Home loan repayment capacity
It is your responsibility to convince your lender that you are perfectly capable to afford the loan and that you will not default the payment in future. For this, you will be required to give the lender documents and credentials that can substantiate the repayment capacity. A full-fledged Bank statement records, salary slip and other financial documents will be asked to submit in this context.
Fees and penalties involved
You should keep abreast with fees and penalties that a bank charges when lending out home loans. Processing fee is the first thing to consider in this regard. Normally, the rate of interest on processing fee varies from 0.1% to 2% on the entire loan amount. Some banks extend this charge up to 5% making the loan a bit expensive for borrower.
Prepayment penalty is one of the other things to consider. This sort of charge is applicable when a borrower prefers loan disbursement before the tenure of the finance expires. The rate of interest on prepayment varies from 1% to 3% depending upon the market condition and bank’s respective policy.
Late payment penalty comes into force when a borrower does not pay the loan on time. Interest rate on late payment may vary from 1% to 5% depending on a bank’s policy.
Documentation policies
Policies of home loan banks regarding documentation vary from one another. However, if you are salaried person to go for housing finance, you will basically be asked to provide salary slip, bank statement and the credentials proving your current income. On the other hand, if you are self-employed individual, you will be asked to provide business continuity proof, residential address proof, income proof and age proof. They are mandatory documents and need to be duly submitted after application letter regarding the housing finance having been served.
In conclusion, if you want to borrow home loan in India, you need to follow various things.
Home loan is one of the best loans to buy new house or renovate your own home. The loan can be obtained from a bank or lending institute. However, there are many things that a borrower has to follow in this context. Borrowing a home loan is all about making an intelligent decision to solve various monetary issues.
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