What is Home Loan?

An amount borrowed from banks or housing finance companies for purchase, renovation or construction of the home. It is repaid in regular installments along with interest. A rate of interest is almost uniform among banks and financial companies depend upon the rate of interest offered by RBI.

Home loan covers following categories

1. Loans for home purchase –loan is taken for purchasing the home.
2. Loan for land purchase – loan is taken for purchasing the land for construction of a house.
3. Loans for home construction – loan is taken from the bank for the construction of the house.
4. Home Improvement Loans – loan is taken for the making improvement in existing house.
5. Balance transfer loans – the process of transferring your existing home loan account to another bank or NBFC. So people usually opt for this process, if they come across a bank offering a lower rate of interest.
6. Stamp Duty Loans – stamp duty is a tax placed on legal documents usually in the transfer of assets.
7. Bridge Loans – it is a loan taken to fill the requirement of cash in between the process of getting long-term loan applied for purchasing home.
8. RI home loans. – The NRI Home Loan is available to Non – Resident Indians from various Housing Financial Institutions for any of the following activities:

•  For purchase of a house either under construction or on Resale.
•  For self-construction of a property on a plot of land.
•  To finance the purchase of a plot of land allotted by a society/development authority.
•  So as to renovate/improve an existing property in India.

Eligibility for Home Loan

The eligibility mainly depends upon the paying back capacity of the individual. The repayment capacity is based on one’s monthly disposable/surplus income, which, in turn, is based on factors such as total monthly income/surplus less monthly expenses, and other factors such as spouse’s income, assets, liabilities, the stability of income, etc.

Maximum amount can be borrowed for a housing loan.

Most lenders require 10-20% of the home’s purchase price as a down payment from you. The rest, which is 80-90% of the property value, is financed by the lender (banks). The total financed amount also includes registration, transfer, and stamp duty charges.
One co-applicant is also necessary for home loan India. So, if you are the sole owner of the property, any member of your immediate family can be your co-applicant.