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Building a home is one of the top things on the wish list of everyone's life in India. So, if you are thinking of buying your own home and do not know where to start, you are not alone. Numerous banks in India are ready to offer you home loans to help you build your property.
These financial organizations offer you loan schemes, which might seem complex for many people at first. So, in this article, we will give you a detailed overview of home loans, their benefits and the process of applying for one, which will provide you with a solid idea about your next step.
Purpose:
Home loan schemes are drafted for people who dream of purchasing their own house but fall short of the necessary financial resources. Most people possess the land for their potential property but do not have sufficient money to build their homes.
A home loan is described as a type of secured loan by which you can borrow money from the bank by offering your property as collateral. A bank will decide on your suitable home loan scheme, given you are eligible as a candidate. You may apply for a home loan for the following purposes concerning the type of loan offered by banks and NBFCs in India.
- Home purchase
- Land/plot purchase
- House construction
- House improvement/extension
- House conversion
Benefits:
There are plenty of benefits for one who opts for a home loan. Let us look at some of the significant benefits home loan schemes offer.
1. Long-term benefit:
Owing to the increasing inflation rate and property value increment, it is reasonable to opt for a home loan rather than renting a home. People planning to stay in a place for a longer period can benefit from buying a home by taking loans.
2. Lower interest rate:
The rate of interest in the country has had ups and downs through the years. But after taking a home loan, you can find the interest rates dropping over several years. You can also get a deduction on your interest amount based on certain criteria under section 80EE of the Income Tax Act 1961.
3. Property value:
The effect of capital appreciation has been the driving force of people opting for a home loan. The value of real estate properties is increasing day by day, and the rent values are increasing depending on the inflation rate. So, buying a home with a loan is one of the best measures you can take against inflation. It will also help you acquire a property whose value increases multiply over the years.
4. Property autonomy and sense of appreciation:
Buying your home with a home loan can give you the rights to property ownership. You gain a sense of appreciation by claiming a property's autonomy and gaining boosted wealth in the future. Especially for people in the higher tax bracket, taking a home loan is financially more beneficial than renting a property.
Key points to remember while comparing home loans:
There are several key points to remember while taking a home loan by selecting a suitable bank or NBFC. So, check out the parameters you need to consider before opting for a home loan.
Eligibility:
The essential eligibility criteria for taking a home loan in India is that you should be a minimum of 21 years old to avail of the loan and below 65 years, for most banks. In addition, you should also have a minimum income of 1.8 LPA with current job stability of 2-3 years.
Interest rate:
It is best to opt for a lender who has the lowest rate of income possible. For example, SBI offers loans at 6.70% per annum, while NBFCs such as India shelter finance corporation have an interest rate of 12.99% per annum.
Maximum amount:
Lenders usually provide a loan that sums up 70-80% of the total value of the property. Hence, limiting the monthly EMI below 40% of your income is advised. However, the amount depends on your capability to repay the principal and interest.
Conclusion:
Well, it is essential to consider your income and repayment capability as well as the interest demanded by the lender to avail a perfect home loan plan for your property. We hope the article was helpful enough to provide you with in-depth insights into home loans in India and ways to select the ideal scheme for yourself.