Home Loan Guide for First-Time Home Buyers in India
Capri Home Loans
Published: Aug 09, 2022
We all dream of owning a home someday. However, in today’s economy, buying a home requires due planning and research, be it the home you are buying or the finances required for it. That is where home loans come in, empowering home buyers and giving them the much-needed finances to buy a home of their preference.
If you too are planning to avail a home loan, then we would advise you to start by checking your home loan eligibility first. The next important step after that is to clearly understand the procedure of applying for a home loan, including the type of home loan you need, the interest rate on offer, and a lot more. Let’s delve into it all, one by one.
What is a Home Loan?
A home loan basically refers to the amount that an individual receives from banks and NBFCs ( Non-Banking Financial Institutions) for buying or constructing a new home. Since this is a long-term financial commitment, most of us look for a home loan with low interest rates along with favorable terms and conditions. That is why doing your due research comes in handy before applying for a home loan.
What are the Most Common Types of Home Loans For Residential Buyers?
Enlisting the different types of home loans you can avail based on your requirements: –
Home Purchase Loans
This is one of the most common types of home loans offered by most financial institutions in the country. This can be utilized for buying a ready-to-move apartment, independent house or villa.
The loan amount being offered as per your eligibility, interest rates and repayment terms may vary from one home loan provider to another.
Land Purchase Loans
In this case, you seek a loan to purchase a piece of land on which you are planning to build your home. Most financial institutions provide up to 80% of the cost and the remainder has to be borne by the applicants themselves.
Home Construction Loans
As the name suggests, this type of loan is required for building a house on a piece of land that you already own.
Home Renovation Loans
This type of home loan is ideal for when you need to spruce up your existing space, be it painting, woodwork, flooring, or other improvements.
Home Extension Loans
These loans cater to your changing residential needs with the passage of time. With a home extension loan, you can build new rooms on the upper floors or terrace (after due approval).
What Is The Eligibility Criteria for a Home Loan?
1) The applicant should be between the age of 18 and 60 years.
2) The applicant should be a salaried or a self-employed individual with a steady source of income.
3) The applicant should earn more than the minimum income quoted.
The applicants must have the financial bandwidth (50% of their monthly income) for repaying the home loan EMIs. Your ongoing liabilities will also dictate the home loan amount disbursed to you; the lesser the better. And, since most financial institutions provide only 80% of the loan amount, the applicant has to be able to pay the remaining amount otherwise your home loan application might get rejected.
What are the Documents Required to apply for a Home Loan?
If you are planning to apply for a home loan, then there are certain documents that you need to submit beforehand. This list includes: –
1) PAN Card or Aadhar card for identity proof.
2) Driving license, passport or utility bill for residence proof.
3) Cheque for the processing fee.
4) Bank statement of the last six months.
About Home Loan Interest Rates in India
Here are the two most common types of home loan interest rates in India:
Fixed Interest Rate Home Loan:
In this type of loan, the rate of interest remains the same for the complete duration of the loan. It doesn’t change during the tenure of the loan.
Floating Interest Rate Home Loan:
In this type of loan, the rate of interest fluctuates depending on the current market conditions. Based on how the market is performing at a particular point in time, the home loan interest rate might go up or down.
What are the Advantages of Taking a Home Loan?
The task of getting a housing loan for first-time buyers can be a bit challenging but there are plenty of benefits as well for first-time home buyers: –
1) You can use your savings in case of an emergency.
2) It can also help to improve your credit score.
3) Home loans also result in tax exemptions.
4) Interest rates are quite low on home loans.
All the information provided above covers the important aspects of home loans that you must know about, and useful tips for first-time home buyers. Be thorough in your research and precise in your documentation – the whole process of availing a home loan is sure to become seamless.