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A Comprehensive Home Loan Guide for First-time Home Buyers in India
by Admin September 24, 2021

A Comprehensive Home Loan Guide for First-time Home Buyers in India

Your homeownership goals might look super challenging, however, the actual homebuying process can be smooth if you choose not to scour the property on your own. Today, a list of accredited real estate service providers holds the expertise to help you in finding a place, securing financing, making an offer, and closing the deal to ease the buying process. Before you begin home-hunting, ask yourself what sort of residence you need and how much you can actually afford, how much financing you can get. After you’re sorted with this, the rest can be done by the realtor keeping in mind your preferences.

 

Here are some handy tips to make life easier as we take you through all the aspects of the home loan process

 

What is a home loan?

A home loan may be explained as the amount of money borrowed from either a bank or any credited financial institution at a particular rate of interest. The money that is borrowed needs to be paid back as monthly installments, called (EMI) within the agreed period. 

 

Benefits of taking a home loan?

Availing a home loan is a long-term financial commitment and does offer good benefits such as:

 

Capital appreciation- Property prices will only increase and not depreciate

 

Increase in credit eligibility- After the full loan amount & ROI is paid to the bank, the borrower will have complete ownership of the house and can avail of loans against it. 

 

Helps in building good credit history- A mortgage is considered to be good debt as compared to credit card debt.

 

Tax benefits- A home loan comes with some excellent tax benefits. The deduction can be availed for the interest paid on the home loan. People buying their first home and availing of joint home loans can also enjoy certain benefits.

 

The Eligibility Criteria 

Be it private or government banks and NBFCs, the eligibility criteria to apply for a loan is different for each of them.

Here’s a list of the requirements home loan buyer has to meet

  • Should be aged between 18 and 60 years

  • Should be salaried or a self-employed individual with a stable source of income 

  • Should earn more than the minimum income quoted by the banks

All the above factors will help you qualify for the home loan, however, there are a few other factors on which your application hinges like

  • Show prove that you have at least 50% of your income ready to serve the EMIs

  • Other loan commitments are crucial hence you must clear every other loan commitment before applying for a home loan.

  • Your down payment capability is also considered and hence the bank gives a loan on 80% of the value of the property. The other 20% funds should be done by you. 

 

 Documents Needed

  • A signed application form and a photograph

  • Identification proof and residence proof like PAN Card passport/driving license or any of the latest utility bills respectively. 

  • A cheque for the processing fee

  • Bank statements of the previous 6 months

  • Pay-slips for the last three months if you’re a salaried professional along with their Form 16 or Income Tax Returns (ITR) filing

 

Types of home loan interest rates

  • Fixed interest rate home loan

  • Floating interest rate 

 

Factors that might affect your loan application 

  • Age

  • Income bracket

  • Property type and its location

  • The market value of the property

 

Loan Tenure

The tenure of a home loan can often go on for over 20 to max up to 30 years.

 

The Terms and Conditions of The Loan:

You need to sign several documents when borrowing a home loan as it is legally binding. So, avoid making any mistakes by going through all the clauses and sub-clauses mentioned in the loan agreement before signing. 

Buying a home is an achievement hence make sure to make a well-informed decision.

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