KNOW YOUR HOME LOAN & AVAIL BENEFIT TO MAKE YOUR DREAM HOUSE Q1- What is a Home Loan? Home Loan is offered to individuals who wish to purchase or construct a house. The property is mortgaged to the lender as a security till the repayment of the loan. The bank or financial institution will hold the title or deed to the property till the loan has been paid back with the interest due for it. Q2-What are the different types of home loan? Through a Home Loan, one can purchase or construct a new house/apartment; a Home Improvement loan is offered to those who wish to renovate their houses; a Home Extension loan is for consumers planning to add extra space to their house such as a new room or a new wing; a Loan against Property is offered for a individuals seeking loan against an already existing property; a Land Purchase Loan is provided to consumers buying land as an investment, maybe to build a house later on and a Balance transfer loan is basically a home loan to pay off an existing home loan as this enables you to avail a loan with a lower interest rate. Q-3 What is an EMI? An EMI, equated monthly installment, is the amount of money to be paid to the bank or lender on a monthly basis. It consists of the principal amount and the interest on said amount, equally divided by the number of months in the loan tenure. The EMI is paid on a fixed date of the month until the full amount has been repaid. Calculating your EMI in advance can help you plan your budget, because you will know exactly how much money to pay each month. Q4 - What is the maximum amount that can be borrowed? The amount that can be financed typically depends on the status of the borrower (resident/non-resident), type of home loan (renovation, property purchase, property extension) and the financial institute. It is generally offered for up to 80-85% of the cost of the property. Q 5 - What is the typical repayment duration? The repayment tenure takes into consideration the repayment ability of the borrower based on their income and existing EMIs. The typical duration for which a home loan can be taken is anywhere between 5-30 years. Q 6 - What are the types of interest rates on home loan? The interest rates for Home Loans can be fixed or floating, or partly fixed and or partly floating, suiting the needs of the borrower. Fixed interest rate? A fixed interest rate on a loan or mortgage stays at the predetermined rate for the entire term of the loan. This allows borrowers to plan their future payments. Usually personal loans and credit cards have fixed interest rates. Floating interest rate? A floating interest rate fluctuates with the market or along with an index. Floating rates are usually offered for home loans; the prime lending rate or the base rate is used as a basis for calculating the floating rate and the interest rate charged is the prime interest rate/base rate plus a certain spread (as charged by the credit institution). Q 7- What are the tax benefits on Home Loan? There are certain tax benefits available on your Home Loan. Please check with your Chartered Accountant to know of these benefits. Q 8 - What do lenders look for? Lenders look for personal details such as a good credit history, annual and monthly income, existing EMIs of the consumer, a clean title to the house/property and the location of the house before approving a home loan application. Buy our credit report here to ensure your credit history and personal details are in order so as to avoid rejection from the lender.
Posted on: Sun, 15 Sep 2013 18:56:32 +0000
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