About Home Loan:
A house door with your name on it is the ultimate dream of any living individual. In India, owning your own house is considered as one of the major signs of success. As the average income ratio of Indians is increasing with globalization, the desire to buy your own house is also increasing simultaneously. Along with this, the price of property too is increasing day by day, irrespective whether it’s an urban or rural area.
Thus it becomes highly impossible for a common man to buy a house only with his or her savings. This has lead to an increase and extreme popularity in purchasing home loans from Banks and NBFCs to fulfill their dream. Home loans is the best selling banking product. It also assures a stronger and longer relationship with your bank. A home loan that is also known as a housing loan refers to an amount borrowed by a consumer from a bank or NBFC to buy, construct, repair or renovate a residential property. This borrowed amount or loan is lent on a fixed or flexible tenure and an interest rate on the borrowed amount. The borrower is supposed to pay off the principal amount of loan with the interest within the fixed tenure.
Why should you take a Home Loan?
The increase in the property rate across the nation (both land and building) has made it impossible for people to buy a home by only using their existing savings. There are many hidden charges and processing fees in the process of buying a house. So instead of buying a house by spending every last penny of your savings and living in constant pressure of being financially insecure, you should definitely take a home loan.
Buying a property involves large scale financial transactions. At the time of buying a property, a buyer does not necessarily have the entire amount to his/her disposal. Here the home loan covers the financial gap and helps you with a smooth financial transaction that is hassle free.
Under section 24 of the Income Tax Act, home loans are eligible for tax exemptions. You can claim up to Rs. 1.5 lakh out of the interest component of your home loan. Also, if you are staying in the house you got loan for, then you can claim exemption on the principal amount of home loan of up to Rs. 1,00,000.
When banks give away home loans, they finance you up to 85%-90% of the original house purchase price. The borrowers are supposed to pay only 10%-15% of remaining amount. This helps to loosen the financial burden on your shoulders. This way you don't have to spend all your savings purchasing a house.
What are the Types of Home Loan?
Home Purchase Loans
Obvious to the name, this type of loan is given to the borrower specifically to buy a home. Be it a flat or a bungalow, all banks and NBFCs offer home purchase loan. This is the most popular type of loan and highest number of consumers opts for this type of loan.
Home Loan to Purchase a Piece of Land
Consumers, who want to live in a self-built house, need a piece of land or property to do so. People also buy a land with an intention of sheer investment. To buy such a land in your name costs a fortune. Here you can opt for this type of loan. But this type of loan is not necessarily offered by all banks or NBFCs. You can get this type of loan only if you are purchasing a vacant plot. The term, the interest rate and procedure for this type of loan is similar to basic home purchase loan.
Pradhan Mantri Awas Yojana
This government scheme also known as PMAY, was earlier known as Indira Gandhi Awas Yojana. In June 2015, the government announced Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana which gives every Indian citizen a chance to get his/her dream house. Almost all banks offer loan in coalition with this scheme.
NRI Home Loan
People who are living outside India, also known as Non-Resident Indians (NRI) buy property in India for investment or for their family back home. The terms, requirements, interest rates and procedures are different for them as compared to the basic home loan. These are specifically designed for NRI's.
Home Loans for Extension/Renovation
Many times consumers wish to further construct or renovate their existing house. Like adding an extra floor or renovating the exteriors and interiors keeping the original structure the same. These loans are becoming popular day by day as people are more interested in renovating existing house than buying a new one. Also this type of loan offers similar interest rates as basic home loan.
Home Conversion Loan
Many time consumers change their residence. It can be for any personal or professional reason. But moving into another house doesn't come cheaper either. If one already has a home loan on an earlier purchased house and wishes to move into a new house by opting for a new home loan, this comes as a savior for them. The home conversion loan helps you to transfer the current loan from your old house to your new house.
What are the Characteristics of Best Home Loan?
- There are many Characteristics of best Home Loan. Go for best Home loans by choosing any one or all from below:
- The home loan amount varies from bank to bank. But the minimum is Rs 2,00,000/-.
- Best Home loans come with longer repayment period, as long as 30 years. It includes repaying the principal amount along with the interest costs. The minimum tenure is 5 years.
- Best Home loan can be repaid in the form of EMI (Equated Monthly Installment).
- The EMI (Equated Monthly Installment) of the loan is formed by combining the principal amount and the interest together.
- The repayment of best home loans is done in equal monthly installments.
- The home loan charges are inclusive of registration charge, processing fees, prepayment penalty, commitment charge and miscellaneous charges for documentation and consultation.
- Best Home Loans are considered as secured advances.
- To avail a best home loan, borrower has to give mortgage. The collateral here is usually the property that is being bought or even the existing property can also be given as collateral.
- The banks and NBFCs offer best home loan with three main types of interest rates: Fixed, Floating or a combination of fixed and floating. The Indian government has introduced MCLR (Marginal Cost of funds based on Lending Rate). This is used by banks and NBFCs to decide the rate of interest at which they want to lend money to borrowers.
- To reduce liability, banks accept pre-payments. It is allowed by all banks and NBFCs. Very few banks charge for pre-payment.
- In home loans, you can get loans in higher amounts compared to other types of loans i.e. 85% to 90%.
- To avail the best home loans you can have your spouse or parents as co-applicant or joint applicant. You get tax benefits from that.
- The interest rate on best home loan is comparatively lower than personal loan as it is a type a secured loan.
- The amount bank will give you under the best home loan will vary based on your income, credit history, the locality/city you are planning the purchase a house in and various other factors.
- You can enjoy tax benefits on the best home loan according to the Income Tax Act, 1961.
What are the Eligibility Criteria to avail a Best Home Loan?
- To determine whether you are eligible to get a best home loan or not, there are various criteria involved. Such as income, employment status, loan tenure etc. The criteria differ from bank to bank. But we have given some of the important eligibility criteria below:
- Any consumer who has a regular and steady source of income can get the best home loan.
- Irrespective of consumer’s profession (salaried, self-employed or business person) he/she can get the best home loan.
- The consumer, who wants to apply for the best home loan, should be of minimum 21 years old. Whereas the repayments has to be done by the age of 60, maximum 65.
- Applicant’s savings history with bank plays an important role in approval of the loan.
- If you have a bad credit history, especially before 3 months of applying for the best home loan, it can become a large hurdle in accessing the loan.
- Those who have their own business or are self employed, have to present their profits and turn over to determine the value of loan they’ll be applying.
- The applicant also has to give proof of their current residence. He or she should be staying at that current residence for at least a year. This will be seen as a proof of stability along with employment and financial records.
- Applicant needs a good credit score. (750-900 is considered as a good credit score).
What are the Documents Required to avail a Best Home Loan?
The process of getting the best home loan can be made easier if you know exactly what documents you need to submit with your application. The documents are filed according to the eligibility criteria.
- The list of required documents differs from lender to lender. But we have given a generic list of required documents below:
- Neatly signed and filled home loan application form
- Passport-size photographs
- Statements of investments (if any)
- Copy of plan approved for the proposed construction/extension (in case of applying for home loan for extension)
- Cost estimation or valuation report from the bank’s (or finance company’s) panel CA
- Allotment letter of housing board/NOC of the society/builder etc.
- Bank statements and salary slips of last 6 months from application date
- Identity and signature proof – Passport, Pan card, Driving License, Voter ID card, Aadhar card, employee identity card in case of government employees
- Address Proof – Bank statement, Rent Agreement, Voter ID card, Ration card, Passport, Driving License, telephone/electricity/water/credit card bill or Property tax
- Age Proof – Voter ID card, Secondary school leaving certificate (class 10), birth certificate, Passport, Aadhar Card, pension payment order or receipt of LIC policy
- Valuation/cost estimation report from evaluator approved by the NBFC or Bank
- Property papers with OC and CC
What are the Tax Benefits I'll get from a Best Home Loan?
Borrowers can enjoy tax benefits under section 24 of the Income Tax Act. Via this you can claim tax exemptions of up to Rs. 2,00,000 for interest component of your EMI paid during the financial year. According to the Section 80 C of Income Tax Act you can also claim tax benefit of Rs. 1.5 lakh of principal paid during the financial year. If borrower has their spouse as a co-applicant with them in the home loan then both the applicants can enjoy double your tax benefits. The applicant and the co-applicants, both are separately eligible for both interest and principal tax benefits according to the above mentioned acts.
What are the Fees and Charges Applicable to get a Best Home Loan?
There are specific fees and charges applied by banks and NBFCs while processing the best home loans. These charges are different from the interest rates. These charges differ in value from lender to lender, but the types of charges are the same everywhere.
Banks charge a non-refundable processing fee for your home loan request. Different banks charges different amounts as processing fee. This fee is either a specific percentage of the loan amount or a fixed amount of money. Depending upon applicant's profile and considering some terms and conditions, banks often negotiate and lower the processing charges or waive it off completely.
Late payment charges
If the borrower is late in paying any of the loan installments, almost all the banks impose late payment charges on the borrower. Be it any reason, financial crunch or some other financial liability or plain oversight, banks do not bend their rules.
Banks offer best home loans on two types of interest rates: Fixed interest rate or Floating interest rate. The borrower can choose between these two interest rates. Every time a borrower applies for switching from fixed rate to floating or vice versa, conversion charges are applied by the bank. These charges are some specific percentage of the principal amount of the loan.
Banks need lawyers to complete the task of verification of property, for which loan will be given. As many banks do not have in-house lawyers, they hire them to complete the task and recover their fees from home loan customers.
Some banks charge administrative fee separately from the processing fee. Administrative fee is applied by banks to compensate for the back-end administrative processes that are performed while processing of home loan applications.
How to Apply For a Best Home Loan on Richi Loans & Financial Services?
- Applying for a home loan on Richi Loans & Financial Services involves few easy steps:
- Step 1: Go to the ‘Home Loan’ page on our website and click on ‘Check Your Eligibility’ box.
- Step 2: Fill out the initial personal and financial information. Once completed, our loan calculator checks your eligibility with its highly efficient algorithm.
- Step 3:Our loan calculator presents you a list of banks and NBFCs most suitable for you as per your eligibility criteria. The list will include the name of the financial institutions, interest rates, required document list etc..
- Step 4:From the given list, you can choose the financial institute of your choice. You can start filling up the form and upload the required documents. Here, if needed, you can call or mail our experts for advice. The contact details are given on our website.
- Step 5:Your application will be sent electronically to the bank you selected. You will be informed about the status of your application via SMS, email or you can track it via website too..
Home Loan Interest rate
The following are the best home loan interest rates available:
|Bank Name||Interest rate*||Bank Name||Interest rate*|
|Axis Bank||8.50% – 11.75% *||HDFC Bank Ltd.||8.70% – 8.85% *|
|Aditya Birla Home Finance Ltd.||8.55% – 8.99%||DCB Bank Ltd.||10.44%*|
|Deutsche Bank||10.50%*||DBS Bank Ltd.||8.65%*|
|ICICI Bank Ltd.||8.70% – 8.95% *||Edelweiss Housing Finance Ltd.||10.50%*|
|Dewan Housing Finance Ltd.||8.70%*||Indiabulls Housing Finance Ltd. (IBHFL)||8.50% to 11.00%*|
|DMI Housing Finance Pvt. Ltd.||12.75%*||Fedbank Financial Services Ltd.||8.95%*|
|Yes Bank||9.35% to 10.50% *||Hero Fin Corp||17%*|
|PNB Housing Finance Ltd.||8.65%- 14.60% *||Tata Capital Housing Finance Ltd.||8.65% – 8.80%*|
|IIFL (India Infoline Finance Ltd.)||8.50%*||IDFC Bank Ltd.||8.75% *|
|HSBC Ltd.||8.50% – 9.00%*||Reliance Home Finance Ltd.||10.00% to 11.75%*|
|Standard Chartered Bank||8.75%*||L & T Finance Ltd.||9.90% to 10.75%*|
|Shriram Housing Finance Ltd.||15% *|
A. Repayment period of loan starts after the entire home loan is disbursed to the borrower. If the property is under-construction, then the banks allow payment of the partially disbursed amount. Towards this partially disbursed loan amount, borrowers are allowed to either repay the principal and interest amount both or just the interest amount or none of the above mentioned amount at all.
A. The home loan is sanctioned as soon as all the required documents are submitted and verified successfully. This procedure takes anywhere between 10 to 30 days.