Purchasing a home is a dream and an aspiration for many. A home is associated with security as well as it serves as a valuable investment in your overall portfolio. While buying a home, finances are crucial in determining the amount you can invest in the property. Therefore, you need to analyze and then choose the housing finance loan that best suits your requirements.
Before deciding on the best home loan, it’s essential to know about the different types of home loans and the benefits they offer. By learning about the kind of home loans, you can make an informed choice.
Now that you’ve understood the benefits and the eligibility for home loans, you can contact your local lending institution and choose the best home loan. NBFCs offer attractive house loans. Go through the eligibility criteria to find out your chances of securing the home loan apt for you. You are just one step away from having your dream home.
Read below to understand more about home loans and the latest home loan interest rate.
Features of Home Loans
- Amount:- The range of your home loan can vary between Rs. 2 Lakhs to up to Rs. 2 crores. The amount depends on various factors such as your current income, tenure, age, collateral provided by you, etc.
- Type of Loan:Home loans are secured loans that require the borrower to put up collateral as security to cover the loan amount.
- Tenure:The loan tenure is available for a maximum of 30 years. The current home loan interest rate varies based on your loan tenure, as well as various other factors, including market conditions, your eligibility and the lender’s policy.
Eligibility of a Home Loan
Different lending institutions have varying terms regarding the eligibility criteria for your housing finance. Below are some crucial factors to consider when applying for your home loan.
- Credit Score– While determining your loan application, your credit score plays an important role. A credit score above 700 implies your repayment history has been excellent, which increases your chances of securing a loan. A higher credit score can also be a positive parameter for you to get a bigger loan amount.
- Age– Your age is another vital factor for your housing finance loan. Young people have a better chance of securing a longer loan tenure compared to older people.
- Salary– Your income is a factor for your loan amount and the associated conditions. Whether the income is from self-employed sources or regular employment, your salary plays a crucial role in your home loan. Having a regular and consistent source of income is preferred.
Benefits of Taking a Home Loan
- Property Check
When you buy a house through a bank, the bank will do extensive legal checks on the property and ensure it is legitimate.
When you take up a floating-rate home loan for non-business purposes, you may make prepayments anytime you have a lump sum available without incurring any penalties. It will allow you to pay off your house loan far sooner than the agreed-upon term.
Types of home loans
There are two primary types of home loans; fixed and floating interest home loans.
Fixed-interest loans have an interest rate that stays the same throughout the loan’s term. It ensures that the customer is unaffected by market fluctuations or potential interest rate increases.
In the case of a floating interest rate loan, the customer is subject to market risk, and market interest rate conditions determine his gain or loss. If the interest rate declines in the future, a floating rate is advantageous. A floating rate, sometimes known as an ‘adjustable rate,’ is a non-transparent rate.
Consider all associated factors if you wish to switch from one interest type to the other.