Apply for Housing Loan Online
Are you among people in the streets looking for nuts and bolts about a home loan? Buying a home is a vision to reality thing for countless people, and at the same time, acquiring the best home loans can be daunting. So, better be ready with your checklist before unknowingly getting into the field of housing loans. If you are poised to apply for a home loan, know your eligibility and applicable home loan interest rate through home loan cal. Before finalizing a colossal financial decision, refer to our in-depth housing loan guide, and prepare a good knowledge base.
Home Loan
A home loan is a determined amount of money that a person borrows from a bank or other finance providers to buy a house. House loans are applicable for the purchase of brand-new houses, flats, and plots. Furthermore, one can acquire a home loan for renovation purposes in addition to the extension and repair of the existing house.
While opting for a housing loan, keep an eye on the housing loan interest rate to corroborate that the loan amount to be returned doesn’t become a burden on you. A house loan can be tied down to establish a house, modernization, and redecoration of the old house, or buying a brand new ready-to-move-in house and flat.
Excessive real estate leads people to avail of a housing loan for being a homeowner. Furthermore, banks and housing finance companies prefer the facility of home loan top up using which the applicant can borrow a specific amount over the ongoing house loan.
Small amounts such as a loan of 5 lakhs are a perfect fit for top-up loans. The best part is home loan top up interest rate is a lot less than the other available loan and associated interest rate. The top-up loan interest rate varies from 6.9% to 10.10% as per various banks and finance providers.
The crucial point about a property loan is when you acquire it, your property is kept as a mortgage by the bank/finance provider. To get an overall hold on your property, you need to pay the loan amount through EMIs every month. The lender determines the home loan EMI through the home loan cal or EMI calculator.
The interest amount and principal amount do qualify for a tax deduction. Thus, we recommend that the best bank for home loan will be the one with the lowest home loan interest rate. After going through the basics, let’s go through the advantages of property loans.
Features and Benefits of Home Loan
When you count on a house loan, you unlock an array of top-notch features and benefits. Some of them are depicted below:
Tax Benefits With House Loan
splendid benefit of acquiring a property loan is the deduction of income tax. You can claim this deduction on the interest amount paid on an annual basis. People with housing loans are subject to receive income tax benefits. The paid interest amount is deducted from the income tax that is supposed to be paid.
Available at Lower Rate Of Interest
loans can be procured at lower interest rates as compared to other available loans. Getting a loan is highly beneficial despite a personal loan to purchase your own house. The lenders don't want to face skipped EMI's and unpaid loan amounts and to avoid such a situation, the housing loans are available at low interest rates.
Due Diligence Of Property
The best part about such a loan is that if you fail to detect the property's authenticity, the bank will carry it out. Moreover, while processing the home loan documents, the bank representatives perform legal checks to ensure the borrower doesn't get scammed. Such due diligence checks areas they provide bank's approval about the purchase and alert you in case of risky purchase.
Prolonged Repayment Tenure
Another thing that makes a house loan dissimilar to other loans is the repayment tenure. You can ask for prolonged repayment tenures with utmost ease at your convenience. One can stretch this period up to 25-30 years. With increased repayment time, the monthly EMI gets reduced, bringing down the borrower's burden.
Absence of Prepayment Penalty
In the case of a home loan with a floating interest rate, easily pay any lump sum amount to the lender without bearing any prepayment penalty. Then, close the loan before the closing tenure without any additional charges.
Transfer Balance From one Lender to Another
A bank loan for a house offers you the ability to transfer the balance loan amount from an existing lender to another. There can be multiple reasons behind it: rate of interest, service charges, bothering customer support experience, and many more.
Capital Growth
The real estate data over the past decade reveals that the cost of properties is rising consistently. As per experts, the capital appreciation of the properties has been much higher compared to the paid interest amount. For instance, you took a loan worth 10 lac at a 10% rate of interest. Suppose the property value got elevated by 20% till the end of the loan tenure. In such a case, the capital appreciation becomes higher than the paid interest amount. So, the borrower can now generate more profits by selling out the property.
Increased Loan Eligibility
Paying all EMI's on time and prepayment of the loan before completion helps increase your overall CIBIL score. The best part is with a good credit score, and you get increased loan eligibility. The borrower gets listed as a highly responsible borrower and becomes more eligible to procure loans at lower interest rates.
Key Point
Home loan for women comes with numerous other benefits counting lower interest rates, lower stamp duty, higher loan eligibility and tax deductions. Whereas home loan for pensioners is available only from the bank in which they do have pension account. But it comes with a limited tenure of 15 years or up to the age of 70 years.
Eligibility Criteria For Home Loan
To borrow a property loan, an individual is supposed to pass through specific criteria. Thus, it gives satisfaction to the lender and financial institution about the creditworthiness of the borrowing personnel. In general, the eligibility criteria for a mortgage loan depends on certain factors, including age, borrower’s financial position, overall credit history, CIBIL/credit score and financial obligations. Based on all these parameters, the applicant can get the cheapest home loan rates.
The potential borrowers are supposed to meet indubitable eligibility criteria, resulting in hassle-free housing loan processing. Additionally, the eligibility criteria include age, employment status, category- employee/ or businesspeople, income in addition to property value.
Regardless of the profession, I.e., self-employed, businessperson or salaried individual, an individual can avail of a loan. Although, the criteria may vary a bit. Choose the specific eligibility set based upon your profession and apply for the loan.
Note: Anyone who falls under Foreign Exchange Management Act, 1999 (FEMA) is eligible to procure an NRI home loan in India. NRI home loan is applicable for purchase, construction, renovating a new or old house.
How is Home Loan Eligibility Calculated?
Typically, the home loan eligibility depends upon income source in addition to the repayment capability of an individual. Home loan eligibility is calculated through age, income, credit history, CIBIL, or credit score.
Home Loan Eligibility Criteria
- Present Age of the borrower and retirement year to know about the remaining working period. The applicant's age plays a critical role to determine the home loan eligibility. At max, the loan term is rounded off at 30 years.
- Age Limit ranges from 21 to 65 years for Salaried Individuals.
- Age Limit ranges from 21 to 65 years for Self-Employed personnel.
- Applicants should have a minimum salary of ₹10,000 p.m.
- Business individuals must have ₹2 lac p.a. as an income.
- At max, the loan term can be 30 years.
- Financial position of the applicant: The present and upcoming income play a significant role in determining the loan amount.
- Past & Present credit score: An on-time repayment record will be the appropriate one.
- Other applicable financial obligations, including a car loan or credit card debt.
How to Enhance Home Loan Eligibility?
The applicant can rely on certain things to enhance the eligibility for housing loans:
- Add an earning folk as a co-applicant.
- Avail a well-structured plan for Repayment.
- Stable income flow with regular savings and constant investments works well.
- Enhancing additional sources of income.
- Take appropriate actions for rectifying errors present in the credit score.
- Repayment of ongoing loans along with other short-term debts.
Essential Documents To Avail Home Loan
To avail of a property loan with ultimate ease, be prepared with mentioned documents:
Documents for Identity Proof
- PAN Card
- Aadhar Card
- Voter ID
- Passport
- Driving License
Documents for Address Proof
- Passport-size photographs
- Any identity proof document inclusive of address such as Aadhar Card
- Income Proof
- Salary slips/ Form 16
- Bank Account Statements (last six months)
Other Documents
- Electricity/Telephone Bill
- For business persons: business continuity proof of 5 years
Which Factors Affect Your Home Loan Eligibility?
Certain factors highly affect the eligibility of your mortgage loan. Therefore, you must know about them to fix them as soon as possible to procure loans with utmost ease at the lowest home loan rates.
Applicant Age
The lender determines the home loan tenure through the applicant's age. Applicants who are at the peak of their career can avail of the loan for extended tenor conveniently. To avoid delayed payments, lenders or loan providers cap the maximum age for salaried employees & self-employed personnel.
Credit Profile and Credit Score
The credit score, also termed CIBIL score, is one of the finest benchmarks used by the lender as an eligibility parameter for lending loans. It helps to figure out the involved risk in offering an applicant for the specific home loan amount. An applicant with a 750 or above credit score is an ideal candidate. Profile with on-time repayments without delays stand more chances of approved mortgage loan.
Employment Status and Business Stability
Beyond credit score, another crucial thing in eligibility criteria is income stability. Financial institutions refer to 3 and more years of employment of the salaried applicants to figure out a stable income source for on-time EMI payment. Whereas, in the case of the self-employed applicant, the owner should be running the business for at least five years or longer. Based upon such stable yearly incomes, the bank provides a loan to the borrower.
Condition of the Property
The property that is kept as a mortgage plays a crucial role in loan eligibility. Its condition, market value, and resale value help the lender depict the loan amount's eligibility by the borrower. Properties situated across prime locations and loaded with modern amenities stand a better chance to get higher loan values. Additionally, the property's age also contributes to the list of critical factors. Finally, properties established recently pose a higher propensity for huge loan amounts.
FOIR
FOIR stands for Fixed Obligation to Income Ratio. It is a measure criterion that depicts the repayment capability of the applicant. To calculate FOIR, the lenders consider the applicant's monthly income in opposition to monthly liabilities. The monthly liabilities comprise ongoing EMIs or payable rent. Therefore, FOIR should not be more than 50% of the monthly income. Moreover, it put up to the all-inclusive home loan eligibility.
LTV
The Loan-to-Value ratio caters lenders to calculate the paramount house loan finance value. As per the current market value of the mortgaged property, the LTV determines the peculiar percentage which can be given to the borrower. However, in keeping with the RBI guidelines, the value shall not extend beyond 90 per cent of the overall valuation of mortgage property. For better understanding, let's have an example. Let say the overall value of your property is Rs.75 lakh; then at max, the finance provider can offer you Rs.67.50 lakh. Furthermore, based upon the LTV, the down payment of the loan amount is calculated.
Home Loan Interest Rates
Interest rates play a crucial role in property loans and procuring loans for plot purchase, house construction loans, and home renovation loans. A housing loan interest rate is a discrete percentage imposed on the gross amount borrowed. The current home loan interest rates have a big significance on the rate of interest that the applicant is supposed to pay. Even a small change in bank home loan rates generates a large impact on the home loan emi. Therefore, it is foremost to watch over whether they mutiny, fall or remain steady.
Best home loan rates are what an individual pays for the entitlement. In simple words, consider it similar to leasing a car. Home loan interest rates are what you pay for leasing one’s money.
The home loan interest rate all bank may vary based upon the credit score, so when you apply for a home loan, carry in-depth research on housing loan interest rates of all banks, lowest home loan rates, bank home loan interest rates, and low-interest home loans. The pre-eminent way to opt for home loan interest rate comparison and count on the best suitable one.
A home loan interest rate is the percentage of the amount charged by the lender on the loan. It is represented in percentage and is broadly dependent on the total loan amount and loan tenure. All bank home loan interest rates may vary depending on government policies, borrower’s credibility, size or location of property and value of the property.
Additional Information About Home Loan Interest Rate
It is of two major types – fixed and floating. The interest rate charged is varied from lender to lender. Some have the lowest housing loan interest, and these lenders are usually preferred. You can get specific through home loan interest rate comparison.
The home loan interest rate trend in 2021 has been a little variable, with the lowest interest rate being 6.65% while the highest is 12%. The larger the loan amount, the lesser the interest rate and lower the housing loan EMI. For instance, 15 lakh home loan emi for 10 years will be 17,339 with a 6.9% interest rate and 10 lakh loan emi for 5 years will be 19,754. So, it shows lesser the tenure, the higher will be the EMI.
Since the home loan interest rate is directly related to real estate, the interest amount varies with the trends of properties. If the value of a property increases, banks readily give loans at lower interest rates, and if the value falls, the interest usually tends to be higher.
Some banks offer two government initiatives: the home loan for women and home loan for pensioners. Pradhan Mantri Awas Yojana home loan plays an essential role by making women co-ownership mandatory. These have relatively lower interest rates and are enlisted as the lowest housing loan interest rate. These initiatives are very helpful to uplift the position of women and senior citizens of the country.
