Buying a house is everyone’s dream. People also save a lot for this. Home prices are increasing rapidly due to inflation, due to which home loans have become a necessity.
Today, in our report, we will give all the important information related to the home loan, what it is, what things should be kept in mind while taking it, and how you can get a home loan at a low-interest rate.
What is Home Loan?
A home loan is an interest-bearing amount given by the bank to you to buy a house, which you have to repay within a fixed time frame. In return, the bank mortgages the house you have taken. A home loan is given by a bank or non-banking finance company.
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Home Loan Eligibility
Anyone can take a home loan, but for this, certain conditions have to be fulfilled by that person.
Age: The younger the age at which you apply for the home loan, the higher the chances of getting it cleared. Banks often refrain from giving loans to people above the age of 60 years.
Income: This is the most important parameter in any home loan. If the bank is convinced that your income is sufficient to repay the amount asked in the home loan application, then the home loan is easily available.
Credit Score: A good credit score helps you in getting a loan. A credit score above 750 is considered good.
What is the maximum home available?
Loans are available from the bank for up to 90 percent of the value of your home, but you should take as many home loans as you need. Otherwise, you may get trapped in the cycle of debt.
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For what are home loans available?
A home loan is given by the bank for buying a house as well as for land, renovation, extension, and any improvement in the house.
Benefits of taking home
- A home loan is a secured loan and the interest on it is much lower than that of a personal loan.
- Income tax exemption on a home is available under sections 80C and 24(b).
- Your reputation becomes good in the eyes of the tax authorities.
How to get a home loan at a low-interest rate?
Home loans are offered at two types of interest rates.
- Fixed Rate Home Loan: In this, the interest rate charged on the home loan remains fixed for the entire tenure. It is not affected by changes in interest rates.
- Floating Rate Home Loan: In this, the interest rate keeps on changing on taking the home loan. The loan has to be repaid only at the interest rate fixed by the bank.
Fixed-rate home loan interest rates are generally higher, while floating-rate home loan interest rates are market-oriented. For this reason, the Florint rate is considered suitable for home loans.
What to do for a home loan at a low-interest rate?
- Have a credit score above 750.
- Apply for only one loan at a time.
- Pay off any outstanding loan in full before taking a new loan.
- If there are two earners in the house, then apply for a joint home loan.
- File your income tax every year.
- Present all the documents related to your income while taking the loan.
Keep these things in mind while taking a home loan
- Do not take a loan more than necessary.
- Compare the interest rate of banks and take loans.
- Keep the home loan tenure short.
- Know the terms and conditions of the loan.
Documents required for home loanAadhar card
- PAN card.
- salary slip
- ITR
- Bank statement
- Address proof
- property papers
- Business Address Proof
- employer id card
