Housing Loan India
To own a house is the dream of almost every individual. In India, demand for home is more but not every one is financially strong to own the house. Here comes the concept of home loans given by various banks, financial institutions, housing financing companies like HDFC, State Bank of India, ICICI, Citi Bank, etc.
Housing loans are generally secured loans as the loan amount is huge. Thus the borrower has to offer guarantee against the loan applied for to the lender. Housing finance companies sanction 80-85 percent of the cost of the house. The loan amount is to be repaid in equal monthly installments.
Different lenders offer different rates of interest. Hence the borrower must be aware of the interest rates prevailing in the market. Proper market research must be done so that you can avail the loan at the best rate of interest. Online information of various companies providing loan is available along with interest rates. Application forms can be filled online which saves time of the borrower and also makes the task hassle free.
In India, both fixed interest rate and floating interest rates are offered to the borrower.
- Fixed Interest Rate: It is the rate of interest which is fixed on the loan amount for the life of the loan and it does not vary with fluctuations in the market. Interest rate may vary due to policy change by RBI, market conditions etc.
- Floating Interest Rate: It the rate that fluctuates with the fluctuation in the market interest rate. The interest rate may increase or decrease depending on the situation in the market.
Keeping the circumstances in mind, borrower must opt for the best suitable type of interest rate. Apart from interest there are other charges like processing fee, administrative fee, etc. on the loan amount sanctioned and the charges vary from lender to lender. The companies providing loan check the creditability of the borrower before sanctioning the loan.
For repayment of home loans, there are many options available for the borrower to suit their personal requirements.
- Equal Monthly Installment (EMI)
- Variably Monthly Installment
EMI is the fixed monthly installment to be paid by the borrower. It is a preferred choice of borrower as he is aware of the monthly payment to be made. Variable monthly installment is the flexible payment method.
Prepayment of Housing Loan: In order to repay the loan faster additional payment is made apart from monthly installments. But it is not accepted by all the institutions and they may charge a penalty of 1% to 1.5% of the additional amount repaid. Some institutions allow prepayment and to some we have to give 1-3 months notice before making prepayment.