All You Need to Know About Home Loan.

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.

{Source: http://www.home-loan.in/need-know-home-loan/}