Home loan is most popular loan amongst all the loans since past few years. Also known as housing loan, it grips and supports to fulfill the following purposes:
• Purchase of a new home
• Land for building the house
• Renovating the existing home
• Construction of floors on an existing home
• Transferring already existing home loan.
Features of a home loan:
• It is a secured loan, vanishing away the biggest thing to worry when it comes to buy a loan.
• Second most vital element – the interest rate, is comparatively lower.
• Third most essential factor – tenure for repayment, is longer. It ranges from 5 years to 30 years.
• It allows you to apply jointly with your spouse, family members or any other as co-applicants. Thus while repaying it gets distributed with your partner in loan.
• Prepayment is also made feasible.
• Payment can be done through EMI.
• Bank has the margin of approx. 20%.
• As per the provisions of the IT Act 1961(which is subject to change), tax benefits can be availed on the home loan.
Eligibility criteria for applying for a home loan vary from lender to lender depending upon their policies of practice. But there are some conditions to be considered in a broader sense which are perceived in common by every bank. A few of them are briefed below.
• Age of the applicant – 21 to 65 years.
• Average net annual income is well-thought-out which shows a discrepancy from bank to bank. It ranges from 10, 0000 to 7 lakhs.
• The applicant must either be salaried or at least self-employed.
• If he is employed, the tenure of work should be of 1 year currently and 2 years if worked at some other place earlier.
• The current residence must have completed 1 year of time period.
• The reason behind rise in trend of home loan can be considered as increasing interest among people to buy their own house. Today every other person has a dream to build his own house. In fact it has been a matter of prestige since ages. But affording a home in this expensive world is nearly impossible. Taking a home loan and then stepping ahead with the dream of ‘My House’ helps the dream come true, in a lesser time period.