Are you
exploring options for home loans to buy a house of your dreams? In recent
years, the banks have become more liberal in extending a helping hand to the
people who are buying a home of their own. With the availability of several
banks and varied interest rates, the home buying has become an easy option for
the people. With several banks now eager to lend home loans for your needs and
with an easy home loan procedure, Home loans are a great aspect in buying
process.
However, one
must keep in mind, that the Home loans is one of the most important decision a
person can take and has effects on his financial planning for next 15-20 years.
Hence it must be done with proper research and analysis. Home loans are
considered to be useful tool which fulfill your dream of owning a home. At the
same time, it can get you in trouble, if you do not analyze all your future
expenses and your income, etc. Here are some facts and figures (an indicative
one), which can help you in making a better decision over the Home loans and
get yourself introduced with various aspects of Home Loans.
Interest Rates on Home Loans
The home
loan interest rate at various lenders varies from 9.40% to 16%, while the same
goes down slightly in case, the lender is a woman. While, there are many
private and public sector players in this field, the rate of interest may vary
slightly and you can see interest rates ranging from as low as 9.4% (with some
conditions applied) in case of State Bank of India to 9.55% in case of ICICI
Bank.
The
mentioning of rates of interest is just not as simple as it may sound to be.
The rate of interest varies with the schemes and loan amount. While, there are
two different types of rate of interests applicable on home loans in the form
of fixed rates of interest, the other is a floating rate of interest. Fixed
rates of interest are the one, which remains fixed through the entire duration
of the loan tenure, while floating rate of interest is the one, which keeps on
changing with changing market conditions. In such cases, EMI is not fixed and
varies as per rates of interest at that particular moment of time.
The loan
amount is another factor, which decides the rates of interest. Generally, it
has been seen that the more you require as the loan amount, the more you will
be charged.
Tenure of Home Loans
The Home Loan tenure
can be anything from 1 year to 30 years. There are even some lenders in the
market, whose loan tenure can be a little shorter with the maximum tenure being
fixed at 25 years. Some are having a minimum loan tenure of around 10 years and
other such, which can be seen mostly in non-banking financial corporations.
Thus, the loan tenure is a range varies from 1 year to 30 years in most of the
cases.
Documents required for Home Loans
The Home loan
requires some important documents, without which a home loan cannot be
approved. The needs of documents vary depending upon whether the person is a salaried,
self employed professional or self employed non professional. Please find below
mentioned list of necessary documents:
For Salaried Professionals:
- Application form with photograph, duly signed
- Identity, residence and age proof
- Last 6 months bank statements
- Last 3 months Salary-slips
- Processing fee cheque
- Form 16 / Income Tax Returns
For Self Employed Professionals:
- Application form with photograph duly signed
- Identity, residence and age proof
- Last 6 months bank statements
- Last 3 months Salary-slips
- Processing fee cheque
- Form 16 / Income Tax Returns
- Education qualification certificate and proof of business existence
- Last 3 years Income Tax Returns with computation of Income
- Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account
For Self Employed Non Professionals:
Both, the
documents are required in case of salaried professionals and self employed
professionals.
While the
process of various banks may differ slightly, the documents required in most of
the cases with all banks is almost the same as mentioned above.
Processing Charges of Home Loans
Various
banks charge a nominal percentage as a home loan processing charge. The
processing charge varies, generally 0.5% to 1% at max. There is a certain
ceiling amount which is being fixed at a maximum of around Rs. 10000 in most
cases.
Other Factors Associated with Home
Loans
There are
several other factors which determine the home loans eligibility and interest
rates as concerned with a person. The factors like Income, Credit Score,
location of property, legal issue connected with the property, employment type,
loan amount and other factors are the contributing factors which decide the
home loans eligibility and interest rates.
One must
always keep in mind, that while opting for home loans, one can negotiate rate
of interest for your home loans and always keep in mind that the longer is the
loan tenure, the greater is the total payment. Thus, always try to minimize the
loan amount and try to quickly close your loans, if some money comes to as bonus.
There is no prepayment penalty in floating rates and thus, one can easily pay
off their loans much before the actual loan tenure completion.
With the
loans, you are also provided an option of switching the lenders. Taking a loan
from a particular bank, doesn’t mean you are now bound to the same lender
forever. In an effort to get a better deal, or in some other conditions, you
can switch lenders if you want to.
