How To Get A Bank Home Loan For Buying A House In India

Buying a property is a big investment, and it is quite possible that a property that best meets your requirements and preferences is out of your budgetary range. This is where the significance of home loans becomes pronounced. 

Meant for assisting people wanting to buy a new apartment/house, construct a house or make major renovations in their existing property, home loans make for an important financial tool. With the passage of time, property prices in the country have increased, and as a result, the demand for home loans has scaled up too. 

Getting A Home Loan In India 

For beginners, the process to getting a home loan in India might seem complicated. Despite the popularity of home loans, there are certain complexities related to it, including home loan interest rates in India, which many of us do not stay updated with. In order to increase your chances to secure a home loan, it is important that you have a good understanding of the basics of home loans in India. 

Check Eligibility

Once you have made up your mind to avail a home loan for purchasing an immovable property in the country, the first thing that you must undertake is checking whether or not you are eligible for such loans. 

Your eligibility for a home loan in India basically depends on your capacity to repay the home loan successfully on time, which in turn depends on several factors. Included among these factors are – monthly disposable or surplus income (you should meet the minimum income requirement), credit score, stability of income, liabilities, assets, credit score and so on. In case your income does not meet the minimum requirement for eligibility, you can add along your parent’s or spouse’s income by making them a co-applicant. 

Upon taking a home loan, applicants basically commit to paying 50-60% of their monthly incomes as EMIs (Equated Monthly Instalments) to the bank for a term. The higher is the disposable income of an applicant, higher will be the amount of loan that they will be eligible for.

In addition to the above points, banks also fix an upper age limit for applicants that affect their eligibility.

Make The Necessary Down Payment 

One thing that all applicants must understand before applying for a home loan is that banks don’t shell out hundred per cent of the money you might need, to purchase a property or build a house. Applicants are expected to bear 10-20% of the total purchase amount by themselves, while the lender (banks or non-banking financial companies) provides them with the remaining finance required. The amount of money to be paid by the borrower is described as “down payment”.

Although whether or not you are capable of paying more than is required as down payment, does not affect your eligibility for home loans, it does affect your loan amount and EMI. If you can afford to pay more as down payment, you will require less amount of loan from the bank, which in turn will lower your EMI.

What is the interest rate on a home loan?

 Interest rates on home loans in India can either be fixed or floating. The basic difference between these two interest rates on housing loans offered by banks is with regards to consistency. Fixed rate refers to a type of interest where the rate is fixed throughout the term of the loan. Floating interest rate on home loans in India, on the other hand, refers to variable interest rates throughout the period.

Although there is no clear answer as to which of the two rates of interest is better, you can make the selection based on your convenience. For instance, if you feel that you cannot bear any additional financial burden than your monthly cash flow; fixed rate of loans might be a better option for you.

It is also important to note that the rate of interest rate on home loans may vary from bank to bank. Hence, to avail the lowest interest rate on housing loans, it is suggested that you compare interest rates on home loans offered by banks (a number of) online. Third party websites relating to credits and loans often offer home loan calculation for free. 

In addition to the above, applicants must get in touch with their banks to gather information on other significant aspects such as additional charges and list of documents that they would have to submit along when applying for a home loan.