A house loan or so-called a home loan is an amount of money that one borrows from banks or financial firms to buy a house. Home loans are available at a flexible or fixed rate of interest and expense terms.
People go for home loans to either:
- to buy a home, flat
- to buy a plot of property to construct a house,
- for expansion,
- for renovation,
- or restoration of the prevailing house.
You can use the property as collateral to banks or financial institutions. They will have it as collateral until the repayment of the total loan.
The bank or financial firm usually carries the title to the estate till the total loan is repaid. It also adds up with the cumulative interest.
In India, even the idea of owning a house is still a dream for many individuals. For this, the government works to provide ‘housing for all’. In order to fulfil this aim of the government and its individuals,the housing loans arrive in rescue. Home loans issue is through banks and other non-banking financial companies called NBFCs. These banks and institutions provide loans for housings as well as various other purposes too.
A few of the choices which are available under the category If home loans are as follows:
For purchasing a new house
The most popular and common sector of housing loans is for purchasing a new house or a second-hand estate.
The housing loan depends upon the individual’s income and value. It also depends on the plot or property that the individual desires to buy.
Loans for renovation
People issue home loans so that they can either
- restore, or
- renovate their already owned old houses.
The renovation and refurbishing need:
- painting work
- rebuilding work
- and structural development and other chores.
Again, the loan amount that you will get depends upon the cost which that can incur for renovation. It also depends on the capacity and ability of the individual to repay the loan amount.
Issuing loan against property
In the requirement of urgent or serious need or shortage of money which could be for either for business, job needs or for personal and private objectives. These loans have much lower equated monthly instalments called EMIs. These loans come under the categorization of secured loans and are quite easy and simple to obtain with a much lower rate of interest.
There is a risk in such a home loan as the individual might lose his or her property in case the individual is unable to repay the home loan completely.
Loan issued for construction purposes
Another loan that you can issue is for the construction and building of houses on a plot. The loan which one can issue depends upon the market significance of the estate, the total cost which the individual would incur for construction, and the individual’s income and capability to repay the loan amount in addition to the total interest rate amount.
How to select a bank for a home loan?
One of the most important economic decisions is to choose which bank or financial institution is the most suitable one to issue loans from. Once an individual finishes with buying an estate or a property, they need to make this significant decision.
There are a few factors which an individual has to look for. It includes the eligibility standards, the rates of interest, the processing fee, and various other factors.
A few factors to look at properly before issuing a loan from a bank are:
- The loan amount and the eligibility criteria: The loan amount, which is lent by the banks and institutions mostly depends on the monthly income of the individual.
The loan also relies on the implication of equity.
- The rate of interest:
The equated monthly installment relies on the rate of interest of the home loan. The individual must analyze and do research and go for the banks providing the lowest rate of interest.
Depending on an individual’s needs and desires, lenders like banks and other institutions provide any of the four housing loan facilities mentioned above. This provides a helping hand to the needy to fulfil their long wished dreams and desires of owning a house.