Things You Must Know About Home Loans in India

Buying a house of your own is one of the biggest financial decisions in anyone’s life. It can help you to secure you and your family’s future. Accordingly, purchasing a house is not only considered to be the most important move, but also make your dreams come true. So, nowadays, owning a home has become a necessity and thus availing home loans in India is one of the most finance decisions you can make. 

However, most of the times people take their decision carefully when it comes to mortgages, but a larger chunk of people commit simple mistakes when it comes to their housing loan. Why we are saying this to you, because these small simple mistakes can cost you a huge amount of money over your entire loan tenure. This article enlist some of the important to understand basic aspects of home loans in India, what all documents required, what are the eligibility requirements and benefits to avail those simple mistakes. 

So, what is a housing loan?

Housing loan is a kind of a loan which is disbursed by the lender or any financial institution to an individual for buying any residential property. While most of you would be well versed with the jargons or terminologies related to home loan, not all will be well acquainted with the same. Thus, while negotiating with your lender, builder, regarding documentation, you must have a better understanding of few of the technical terms, and a few operational terms that will come handy to avail home loans in India:

Down Payment: Lenders require that you contribute a certain percent as a down payment while purchasing your home. The down payment usually remains in the range of 15% to 20% of the total purchase price. And it varies from one lender to another, and also depends on your past financial track record, i.e. credit history. 
Principal Amount: This is called the loan amount; for which a borrower has approached to the lender for housing loan. 

Now, understand the type of interest rates- there are two types of interest rates available for taking home loans in India. One is fixed and another is floating interest rate. A fixed interest home loan simply means that the interest rate remains same for the entire loan tenure irrespective of the fluctuations in the market conditions. Whereas, a floating interest housing loan varies periodically over the loan tenure. In this, a lender maintains their own MCLR to which existing interest rates are linked. The MCLR (marginal cost of funds based lending rate) are revised with a period of time, which leads to change in the interest payable as well. MCLR is introduced by the RBI i.e. Reserve Bank of India at which the lenders lend the money to new borrowers. Prior to this, every lender used the base rate as their benchmark rate to lend. It is built on four components that include marginal cost of funds; cash reserve ratio (CRR), operating cost and tenure premium. 

Documents Required for Home Loans in India

Well for a new borrower, we have encountered some of the common documents that are required and need to be submitted to lender. The documents vary from one lender to another. In order to avail Apnapaisa housing loan, first of all you need to duly fill and submit a loan application form. In addition to this, you have to upload two recent passport size color photographs, Aadhar Card, Your KYC documents such as Driving License, Voter ID, PAN Card, etc. With this, you need to submit utility bills such as telephone bills, electricity bill, etc. Your bank statement for past 6 months and your current month salary certificates with FORM 16. 

These were some of the common things that a borrower must know before opting for home loans in India. Hope this guide has been helpful to you! Happy borrowing!