Your Personal Guide to Home Loans in India

Buying a home is one of the biggest joys in life. An individual feels a sense of freedom like no other after owning a house. Not only does owning a home provide emotional security, but it also helps in the journey to financial stability. Buying a home is a goal on many people’s bucket lists. However, to turn that dream into a reality one requires planning and dedication. Opting for a home loan with interest rate is the smarter choice to make when going down the path of purchasing a home. One can take a home loan to purchase a new house, land, flat or a plot of land. They can use the loan amount for the construction of a new house, to renovate and repair a new house, etc. A home loan with an interest rate lets the buyer make repayments in installments. Home loan interest rate can vary from lender to lender. The average home loan interest rate can range from 6.5% to 12%. This variation in home loan interest rates is because of factors such as the Reserve Bank of India’s prescribed repo rate, inflation, and economic activities. The nature of home loan interest rates can either be fixed or floating. 

A fixed interest rate home loan remains constant for the tenure it is issued by the bank. Whereas a floating interest rate home loan changes. This change is often the result of market fluctuations and isn’t always beneficial to the borrower. When it comes to home loan interest rates, some banks offer some special features. Certain banks will offer a 0.05% concession on the levied interest rate. Home loans taken by women, bank staff, or senior citizens often enjoy this concession. Coming to the eligibility portion of the argument, home loan takers often need to meet certain criteria to take up the loan. Banks and other lenders often have an eligibility list. An eligibility list is the minimum criteria that a borrower needs to meet to pay the home loan interest rate. The credit score is the most important criterion. In order to issue a loan, the bank first needs to have an in depth look into your repayment history. This helps the bank ensure that you’ll be able to repay the home loan interest rate amount timely. Hence, the repayment history of the individual is very important.Across all banks, a standard credit score of 750 and above is preferred.  Next, the bank will also take your age, minimum annual salary, collateral security, residency status, employment type, margin requirements, assets, and liabilities into consideration. In today’s time, applying for the interest rate of home loans has become extremely easy. Due to the advent of technology, a person can either go to the bank personally or apply online for a home loan request. After applying, the bank then asks for documents. These documents can include identity proof, residency proof, 6 month bank statements, salary slips, and many others. The documents to be submitted also differ on a case to case basis. Submission of these documents means the processing of your application has been initiated. While that is happening, the bank also checks the value of the asset, Credit Information Bureau Limited (CIBIL) score and also whether you meet the minimum requirements based on your income, assets, liabilities, etc.