Buying a dream home is an important milestone in every one's life and requires a lot of financial planning; it is also becoming a difficult task these days owing to the ever mounting real-estate prices. A home loan is an easy way to fund your house purchase given that it is not a wise idea to burn your entire savings to buy a land or a home; therefore it is important to choose a good Lender/ Housing finance company which can handhold the customer right through the process.

Usually, a home loan ends up being one of the biggest liabilities considering the huge amount and the long tenure involved. Your home loan also offers you some benefits like:

Sense of accomplishment

Buying a home is likely to be the biggest purchase you’ll ever make and a home loan can be one of the biggest liabilities, hence a purchase of a home is a source of anxiety, while giving you a sense of accomplishment along with the sentimental value attached to it. Given that you can spread the repayments on your home loan over 20 or more years; the amount you’ll pay back every month is more manageable, which makes it more affordable too!

Capital Appreciation

Over the last decade, there has been a boom in the real estate market, Construction costs, which account for more than 75 per cent of the home/apartment cost, have risen by 15-20 percent annually. However, capital appreciation in the case of property prices has been much higher than the interest required to be paid on housing loan. Given the situation, investing in a home has been a good way to ensure appreciation and has great prospects to protect you from inflation in the long run.

Low interest rate

Interest rates on home loans are constantly changing – over the years they’ve been higher than 11% and lower than 8%. As home loan has a long tenure, sometimes even 30 years, the interest rates may go through several up and down cycles within that period. Hence a lower interest rate puts lesser burden on the borrower as interest rates on home loans tend to be lower than any other form of borrowing because the loan is secured against your property.

Tax Benefit: Interest paid and Principal repayment

Tax benefits are the first and foremost advantage of availing a home loan as buying your first house on a loan comes with multiple Income tax rebates. These rebates on repayment of the principal amount, and on the basis of interest payment not only reduce your tax outgo, but also help in managing your cash flow better.

Good Credit History

A loan with perfect repayment improves your credit score, which means if you have a home loan; it helps you to build a strong credit history as well. Though it is a debt, it is considered as a good debt since it is attached to a tangible asset. A history of on-time EMI (equated monthly instalment) payments improves your credit and is a consideration of creditors looking to extend additional credit to you along with best interest rate offered on other credit products, such as a car loan or credit cards.

Type of home loans

Customers can avail a lot of other home loan products which cater to different individual needs, not only for buying houses but for a variety of related purposes. The following are some popular types of home loans

Home Purchase Loan

Home purchase loans are taken for buying residential properties that have already been constructed or are under construction.

Home Improvement Loan

Home improvement loan is meant for purpose of renovating or repairing a house, and is given to a person in whose name the property is.

Home Extension Loan

Home Improvement loan is meant for the purpose of Construction/ Addition of New room or for constructing new floors within House premises.

Home Conversion Loan / Internal Balance Transfer

A home conversion loan refers to the transfer of your existing home loan to another one, within the same bank. Here the existing loan is transferred to the new home, including the additional amount required, eliminating the need for pre-payment of the previous loan.

Construction Loan

A construction loan is a type of home loan designed for people who are building a new home on a freehold / leasehold plot or on a plot allotted by a Development Authority.

Balance transfer loans

In Balance transfer an individual can transfer his home loan from one bank to another bank.

Land Purchase Loan

It allows you to fund your plot purchase for construction of a house.

Eligibility and process.

For taking Home loan, customers have to satisfy the eligibility criteria. Lenders will assess eligibility on the basis of income and repayment capacity. The other important considerations include age, qualification, and financial position, number of dependants, spouse’s income and job stability.

The process of taking a home loan can be frustrating, especially if customer has never availed any loan earlier. Applying for a home loan involves various stages.

Step 1: Application form and Documents submission
Step 2: Submission of legal documents - Technical / Valuation check
Step 3: Credit appraisal by the bank
Step 4: Personal Discussion
Step 5: Credit Decision process
Step 6: Sanction / Reject (process stops here if Reject outcome)
Step 7: Signing of post-sanction agreements and security cheques/ECS mandates
Step 8: Submission of original property documents.
Step 9: Disbursement