1) What is Home Loan?

• A home loan is an amount of money borrowed from a lender or bank or any financial services to buy a house or to buy a property for the house or any house that is under construction or to renovate the house. Home loans can be commercial or personal. The collateral or security of a home loan can be the property itself that took as a loan or any other assets, as the loan period and amount will be huge.

2) Why do we take the Home loan?

• Taking a home loan can reduce the burden of construction of the house or the renovation of a house or even in buying the property when there is no enough amount. Taking home loans can also help in tax savings according to the Income Tax Act of Section 24, by deducting the taxes. Home loans have the lowest interest rates.

3) What are the different types of Home loans?

• There are many types of home loans and each home loan has its criteria. The different types of home loans are :
• Home Purchase Loan: This home loan is taken when buying a residential property saying flats, houses, bungalows, villas. Individuals of 18 to 65 years are eligible for this type of home loan whether they are self-employed or salaried. Salaried should have a minimum work experience of 2 years and for self-employed of 5 years.
• Home Construction Loan: This home loan is taken, when there is a construction for the new house or else even to finish the under-construction house or building. Individuals of 18 to 65 years are eligible for this type of home loan whether they are self-employed or salaried. For salaried, the minimum work experience should be of 1 year and for self-employed, it should be of a year.
• Home Improvement Loan: This type of home loan is taken when the house is to get renovate or repair or refurbish. These home loans have low interest. The age criteria are 18 to 65 years.
• Home Extension Loan: This home loan is taken when the existing house wants to be extended saying to add a new room or to enlarge the house based on the family needs. The eligibility criteria are 18 to 65 years.
• Land-Purchase Loan: This home loan is taken, when one wants to purchase a plot of land for construction or investment. The eligibility criteria are 18 to65 years.
• NRI Home loans: This home loan is for non-resident Indians when they want to purchase or renovate a house. The eligibility is 18 to 60 years and should have a minimum of 2 years of experience in their present company for both self-employed and salaried.
• There are many different types of home loans and each type of home loan has its criteria and the rules may change depending on the bank applying for the loan and the interest rate can be fixed or floating.

4) What are the documents required for a home loan?

• The documents required to obtain a home loan are :
• Proof of Identity, saying a PAN card or Aadhar card or Passport, or Voter ID or Applicant Employer’s Identity card
• Proof of Residence, Copy of Telephone Bill or Gas Bill or Water bill or Address proof in Aadhar or PAN card or Passport.
• Property papers, Payment Receipts to bank or lender, Occupancy Certificate, registration certificate, Construction permit, Approved permit for the construction or the property.
• Bank statements, past 6 months statements, any previous loans then past 1-year account statements.
• Income proof, For salaried past 6 months salary slips and last 2 years income tax statements, for self-employed past 3 years Income tax returns and business license, balance sheet with profit and loss accounts and business address proof.

5) What is the eligibility criteria for home loans?

• The home loan eligibility criteria are different from banks to banks and lenders to lenders. Many factors determine the eligibility for a home loan. They are the age of an applicant, should be in between 18 to 65 years, the salary of a minimum of 10,000 for salaried and for self-employed of 1 lac, the applicant’s financial positions and their credit score also matters in most banks and loan terms of the applicant.

6) How to repay a home loan?

• There are few tips to repay loans, they are increasing the EMI and reduce the tenures and if have savings then pay them for the loans, pay extra even if there is an EMI, and avoid interest-only loan take the loan interest payments as floating rather than fixed.

7) What is the minimum and maximum period of a home loan?

• The minimum tenure of home loans can be of 5 years and the maximum tenure of home loans can be of 30 years. There are even permanent home loan tenures depending on the type of loan and by the bank or lender.

8) What are the benefits of a home loan?

• The benefits of a home loan are Low interest, tax benefit, having an own house as an asset which is better than renting a house.

9) What is the process of a home loan?

• The process of a home loan involves, requesting a home loan application by filling all the required details for the bank or lender, submitting required documents, checking the eligibility criteria for the loan, having a background checking, payment process approval, loan approval process by sanction letter and loan disbursal.

10) What is the pre-payment of a home loan?

• Pre-payment of loan means paying all the amount of loan or minimum amount of money before tenure or half or above payment before the payment period is called pre-payment. Most banks allow pre-payment for home loans, but some banks request a fee as interest for pre-closure of the loan.

11)Can I take a joint home loan? What are the criteria for a joint home loan?

• Some banks or lenders or financial services allows joint home loan depending on their company policies. Mostly a joint home loan can be taken with a spouse or blood relative. A joint home loan will reduce the amount of burden of interest when paying for the loan or can help take a huge amount of loan based on the terms of income from the partner as well. The age should be 18 to 70 years with a minimum income of 25,000 each per month for salaried and self-employed.

12) What type of interest does a home loan gave, fixed or floating rate?

• Fixed rates are higher than floating rates. The home loans are fixed from the start of the loan until the end of the loan tenure. The interest rates of home loans can sometimes change based on the lender’s benchmark interest rates.