|
Articles
HOME LOANS
Excellent benefits, affordable installments
Get your dream home .
A new home brings with it new hopes, joys and emotions
and therefore ‘a home of my own’ is a dream
of most of us. However, as it is precious so it is costly.
At time, a person may not be able to buy a home through
his own salary and savings. Here comes the professional
lenders, usually, banks who over such people a loan
depending upon the profile of the borrower to purchase
house.
Home loan is a category of loan offered by lenders,
usually bakns and housing finance companies, to borrowers
who either want to purchase or construct a house. A
common feature of home loan is that the loan is secured
against the asset created through this loan, the home.
Home loan lenders charge certain interest on the amount
of loan offered, and the principal and the interest
can be repaid by the borrower/home owner in installments
spread over certain years.
Purpose of home loan
- Purchase of
o Flat, row house, bungalow from developers
o Existing freehold properties
o Properties in an existing or proposed co-operative
housing society or apartment owner's association
- Self Construction
Key features of Home Loan
- Maximum loan
It varies according to the profile of the borrower
but usually falls in between 80%-125% of the cost
of the property (including the cost of the land) and
based on the repayment capacity of the customer. In
terms of amount it remains in between £7,500
to £75,000.
- Rate of interest also varies according
to the risk associated with borrowers.
- Maximum Term: Again varies according
to the borrowers’ profile but usually remains
in-between 5-25 years subject to retirement age.
- Applicant and Co: Applicant to
the loan: Home Loans can be applied for either individually
or jointly. Proposed owners of the property will have
to be co-applicants. However, the co-applicants need
not be coowners.
- Adjustable Rate Home Loan: Few
lenders offer this facility in which Loan under Adjustable
Rate is linked to Lender’s Retail Prime Lending
Rate (RPLR). The rate on your loan will be revised
every three months from the date of first disbursement,
if there is a change in RPLR, the interest rate on
your loan may change. However, the EMI on the home
loan disbursed will not change*. If the interest rate
increases, the interest component in an EMI will increase
and the principal component will reduce resulting
in an extension of term of the loan, and vice versa
when the interest rate decreases.
Processing Charge
This fee depends upon bank to bank and borrower to
borrower. Most common charge is 1% of the loan amount
applied plus applicable service taxes and cess. But
at time, lenders waive off such charges in specific
situations such as:
- Part or Full Prepayment of loan under Adjustable
Rate (except in case of prepayment through a refinance
from other bank or institutions prepayment charges
will be applicable)
- Fixed Rate - Part prepayment upto 25% of opening
loan outstanding in a financial year
- Replacement of cheques
- Accelerated Repayment Option
Eligibility for availing home loan
The eligibility criteria are:
- The applicant should be adult. In case of maximum
age, lenders have individual term, which most commonly
is 65 years at the time of loan maturity.
- The applicant should have a regular source of income.
Documentation
The documents required are:
- Passport size photograph of all the applicants
- Residence and age verification.
- Bank statements
- Latest salary slip/statement showing all deductions
in case of employed applicants
- Certified copies of Balance Sheets and Profit and
Loss accounts, for self-employed borrowers.
Home, sweet home, built out of your dreams. And, if
you can make your dreams true by your own income, it’s
great but if you cannot afford through your individual
income, there are lenders who realize your long cherished
dream of owning your home through hassle free and customer
friendly home loans.
|
