Home Loans In India
For most people, buying a home is one of their biggest dreams and an extravagant relationship. Making such a dream come true requires a lot of effort on the part of buyers, and the best way to fit an apartment into their budget is a home loan.
With home loans in India, you can choose to buy a new home/apartment or buy a lot of lands to build a home, even if you are renovating, expanding, or repairing an existing home.
Types of Best Housing Loan In India
Indian banks offer different types of home financing options for different purposes. Here is a list of the outstanding types of home loans in India, based on a study of the products offered by some of the leading banks:
New Home Loans
This is the most common type of home loans in India, you can choose to buy a new home/apartment or buy a lot of land to build a home, even if you are renovating, expanding, or repairing an existing home. New home loans are offered to customers who are eligible to purchase a home or property for the first time.
Many housing finance companies, public banks, and private banks offer home loans in India where they borrow money to buy a house of their choice and repay the loan in monthly installments.
You can get up to 80-90% of the market value of the apartment in the form of financing. The lender will keep the house until you pay off the entire loan.
Home Loan Balance Transfer
Individuals can transfer their home loans from one bank to another with a balance transfer option. Most people choose this option to get better interest rates.
Current mortgage rates may be overwhelming or unsatisfied with the services of current lenders. You can transfer your home loan outstanding balance to another lender that offers lower interest rates and better service. At the time of transfer, you can also check the possibility of additional loans for existing loans.
Home Extension / Renovation Loans:
Home loans for home extension or renovation are for borrowers who want to renovate/expand their existing house/property. Suppose you already have a house and want to expand the house with another room or floor to accommodate your growing family. A home improvement loan provides financing for this purpose.
Home renovation loans fund home remodeling or repairs in the event of defects in existing systems, such as painting inside and outside the home, plumbing, electrical system upgrades, and ceiling waterproofing.
Home Construction Loan
This is the right type of home loans in India, if you already have a plot of land and need financing to build a house.
Composite Home Loan
This type of home loans in India provides financing for the purchase of the land where you want to build a house, or for construction, within the framework of a loan. Composite home loans are loans that are offered to customers who buy land or land to build a house.
Pre Approved Mortgage:
The bank offers pre-approved mortgages to eligible borrowers when their creditworthiness, income, and financial position are taken into account for prime loan approval.
Home Loan Replenishment
Home loan replenishment is a service offered by most banks and the NBFC that allows existing customers to borrow a certain amount in addition to their existing home loan.
Home Purchase Loan:
Home purchase loans are especially given to borrowers who are considering buying a home or apartment.
Benefits of Home loans In India
There are some benefits of taking NRI home loans in India :
Property Screening
If you buy a house through a bank, the bank will carry out a thorough legal inspection of the property and check that all the documents presented are valid.
This bank’s due diligence reduces the risk of fraud. If the bank approves the property, it means you and your house are safe.
Fiscal Advantages
The main benefit of home loans in India is the income tax deduction you can claim on interest and principal repayments. You can claim up to ₹1.5 lakh on principal repayments u/s 80C, up to ₹2 lakh on interest repayments u/s 24B, up to ₹2 lakh on interest repayment in special circumstances u/s 80EE and 80EEA, and up to ₹1.5 lakh on stamp duty charge u/s 80C.
Long Repayment Time
Unlike other loans, home loans have a longer repayment term of up to 25-30 years. This is because of the significant amount of credit you need to take out to buy a home.
Dividing the loan amount and the applicable interest rate over a longer period reduces the monthly EMI, reducing the burden on the borrower.
Low-Interest Rates
Home Loans interest rates are much lower than the other types of loans available. If you encounter a cash crisis, you may get a replenishment of your existing mortgage at a lower interest rate than your personal loan to solve the problem.
Choosing a Balance Transfer
You can transfer a home loan from one lender to another for a number of reasons, such as interest rates, service charges, customer service experience, etc.
No Prepaid Penalty
With an Adjustable Mortgage, you can prepay your loan whenever you have the amount you have, without paying a prepayment penalty. This will help you close your mortgage long before the loan expires.
How to Appling For NRI Home Loans In India
With the advent of technology, NRI home loans applications have become easier than ever, thanks to the various media that exist today. You can also access the bank’s branches directly, inquire about NRI home loans options, and apply online.
At the time of application, the bank will collect the required documents from you. Start processing your application, including checks for CIBIL scores, asset values, income and liability-based eligibility, and more. After evaluating and validating all documents, the bank decides to approve or reject the loan.
Home Loan Interest Rate
Average mortgage rates in India range from 6.5% to 12.00%. Interest rates typically vary from creditor to creditor, depending on the repo rate, inflation, economic activity, and many other factors required by the RBI.
Some banks also offer a 0.05% mortgage rate discount for women, bankers, and the elderly.
In addition, mortgage rates can be fixed or variable in nature. Fixed-rate mortgages do not change for a period determined by the bank. This type of mortgage is not affected by market fluctuations.
For variable interest rate mortgages, the applicable interest rate varies depending on market fluctuations. It may be beneficial to the borrower, but it may not.
Eligibility Criteria For Best Nri Home Loans in India
Banks have a list of eligibility criteria for the best NRI home loans in India. The first thing banks need to understand when it comes to paying off your loan is your credit history. In general, a credit score of 750 and above is preferred. Other important points to consider are:
Age
Minimum age: 18 years and maximum age: 70 years
Net Annual Income
At least ₹5-6 Lakh, depending on the type of employment
Employment Type
Applicants can be:
- On salary
- Self-employed
Resident Type
The applicant must be :
- Resident Indian
- Non-Resident India (NRI)
- Person of Indian Origin (PIO)
Residence
Applicants must have:
- Permanent residence
- A rented dwelling where you have lived for at least one year before applying for a loan.
Credit Score
A good credit score of at least 750 or higher from a recognized credit bureau.
Documents Required For Home Loans
The following documents are required along with the officially completed loan application form.
Identity Proof
- PAN
- Valid Passport
- Aadhar Card
- Voter ID
Residence Proof
- Copy of Electricity Bill/Water Bill/Telephone Bill
- Copy of valid Passport/Aadhaar Card/Driving License
Income Proof
| For Salaried Applicant | For Self-employed Applicant |
| Pay slips for the last 3 months | Income tax returns for the last 3 years |
| Copy of Form 16 | Balance sheet audited by accredited CA and income statement for the last three years |
| Certificate of competency for doctors / CA and other professionals | |
| business license information | |
| TDS Certificate | |
| Business address certificate |
Other Documents
- Employer ID card
- Properly completed loan application form with 3 passport-size photos
- Loan account statement for the last 12 months if the applicant has other ongoing loans from other banks / financial institutions
- Bank statements for all bank accounts owned by the applicant for the last 6 months
Home Loan Calculator
In general, the EMI calculator is a simple and practical tool that calculates the amount of credit to be paid to the creditor (bank) on a monthly basis.
The home loan calculator is easy to use, as you only need to enter the value of the loan amount (P), maturity (N), and interest rate (R) you plan to take out.
Frequently Asked Questions(FAQs)
What is the minimum tenure for home loans in India?
The term of a home loan is the period during which the borrower repays the amount of the loan with interest. Generally, a home loan has a minimum term of two years and can range up to 30 years, depending on the lender.
Is ITR mandatory for home loan?
Most lenders need an ITR (last 3 years) to process their mortgage application. If you cannot provide an ITR statement, your application may not be accepted. The ITR is important for assessing creditworthiness and ensuring that EMI can be paid off in time.
How do banks determine home loan amounts?
Lenders determine loan amounts based on the borrower’s credit score. Important considerations are taken into account when calculating your credit score, including the frequency of your credit usage and your payment history. The borrower’s credit score scores the risk that the lender can expect if the loan is approved.
What is margin in home loan?
The security deposit is the down payment you pay for the full cost of the house. Lenders finance only 75-90% of the total cost of the property, with the rest remaining as a margin. Lenders treat this down payment as a sign of commitment, and a large deposit reduces credit risk.