Owning one’s own house is one of the lifetime dream of every person. Many people save for years to have that house which they could call their own. Thanks to a number of banks and financial institutions, today home loans are available at easily to make this dream of every middle class family come true. Taking a home loan nowadays has become very simpler. The RBI has been regularly slashing interest rates, with the result that housing finance loans that came at an interest rate of 16.5% to 18% four years ago are now available at 11.5% to 13% or lower. Each year the Finance Minister's generosity during the Budget seems to be solely concentrated for the housing sector and construction sector. Owing to such favorable government policies almost all the banks and numerous financial; institutions today provide home loans in India. The major players in the market that specialize in home loans include HDFC, LIC, ICICI and nationalized banks. There are also various types of housing loans available in the market that an individual can opt for based on his requirement. These are:
Types of Home Loans
- Home Purchase Loans: These are the basic forms of home loans used for purchasing of a new home.
- Home Improvement Loans: These loans are given for implementing repair works, healing and renovations in a home that has already been purchased.
- Home Construction Loans: These loans are available for the construction of a new home.
- Home Extension Loans: These loans are given for expanding or extending an existing home. For example addition of an extra room etc.
- Home Conversion Loans: These loans are available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.
- Land Purchase Loans: These loans are available for purchasing land for both construction and investment purposes.
- Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home, until a buyer is found for the home.
Home Loans are required to be repaid over a period of 10, 15 or even 20 years . The repayment in made in the form of EMI (Equated monthly installment). This is calculated on the basis of the rate of interest applicable on the loan and its tenure. A person staying in a rented house can opt for a home loan and repay the home loan by saving on his rent. The tax sops offered to the loan applicant is yet another advantage that comes with a home loan. It effectively reduces the cost of borrowing on interest and capital. Mentioned below is the rate of interest charged by selected banks on Home loans for a period of 20 years in India.
Note: DP refers to "Donot Provide".
Document Needed for Home Loans
Most home loan financing companies would require the following documents to process a home loan application.
Home Loan Application for Salaried Employees
- Latest salary slip with all deductions
- Proof of age
- Proof of residence
Home Loan Application for Self employed persons:
- Certified computation of income for past two years
- Certified Profit and Loss Account and Balance Sheet
- Proof of age
- Proof of residence
Presented below is a list of banks in India that specialize in disbursing home loans.Please click on the link to know in detail.
List of Banks in India providing Home Loans