What Is A Home Loan In India?

A home loan is a high-value loan considering a real estate investment. An individual with good credit eligibility can get a home loan of up to Rs. 1 crore. Therefore, it is very important to know all the aspects of a home loan before taking one out.

What is a home loan?

A home loan is a secured loan where the property itself acts as collateral and security. It is a high-value loan that includes a huge sum of money. Due to the high value of the loan, it is often a long-term loan that can extend up to 20 to 30 years. Therefore, individuals in their 30s or 40s are able to afford a home loan and buy a property. It is a huge financial commitment for a good number of years. Hence, individuals with good eligibility criteria, high income, and all the home loan documents required are given approval.

What does a home loan cost?

The total home loan cost would include the rate of interest and various charges. Starting from the application, processing, foreclosure, prepayment, and late charges, everything will be included in the loan cost. The most important component of the loan cost is the rate of interest. The rate of interest on a home loan is considerably lower in comparison to personal and car loans. Since a home loan is a long-term loan, the home loan interest rate should always be minimal.

How is the home loan repaid?

A home loan comes with a flexible repayment scheme. The entire principal loan amount, added to the rate of interest, is divided by the number of months in the loan term. This gives a particular equated monthly instalment amount which the individual needs to pay until the loan term ends. It is smooth and flexible, and the individual can choose the loan term himself. Therefore, the focus should be on getting an ideal installment amount that does not become a burden.

What is the eligibility for a home loan?

A home loan is a high-value loan; therefore, the home loan eligibility criteria are high. A good credit score of at least 750 and a good salary are required for a home loan approval. There are various non-banking financial institutions with a high rate of approval.

Finishing up

At the time of taking a home loan, the home loan interest rate should be the most important priority. Always consider getting a low rate of interest to keep your monthly installment affordable.