In the era of inflation, buying a house or even renovating it is so difficult. Also, sometimes it becomes an out-of-pocket thing. As one also has to look after the other expenses. But, taking a house loan for it can be helpful. Besides this, in today’s times, home loans are the only way to have a shelter over one’s head. Now many people are able to afford the construction of houses because of housing loans. So here in this article, you will read about the various home loans provided by the banks in India and what benefits you can get from them.
Moreover, to help people in fulfilling their varying housing needs, financial institutions provide various types of house loans. Due to that one can select a particular type of home loan as per the eligibility and the requirements. But before choosing, you must compare the interest rates on the loans. Also, this will help you in taking the right housing loan.
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Housing Loan
Further, a house loan is a particular amount of money borrowed from banks to buy a house. You can also take a housing loan from the Housing Finance Companies (HFCs). There are some important factors that should be considered while looking for a home loan. So these factors include interest rate, loan amount, loan tenure, monthly EMIs on the house loans, and credit score.
Before moving towards the various types of house loans, let’s take a look at the documents required while taking any kind of home loan in India.
Documents Required for Home Loans in India
Furthermore, the list of some common documents required when taking any home loan is mentioned below. Although, these requirements may vary from lender to lender.
- Age Proof such as Birth certificate, Class 10 marks sheet, etc.
- Address Proof such as Passport copy, Voter ID, and Electricity bill, etc.
- Income Proof, for example, Salary Slips and ITR details.
- Identification Proof includes PAN Card, Passport, Voter ID, etc.
- Existing Loan Documents if any.
Types of Housing Loans
Moving further, a person can select a home loan according to his requirements and affordability. Because there are various types of home loans available in India. Moreover, the eligibility criteria and interest rates provided by the leading banks for each type of loan will also be discussed. Besides this, anyone who desires to get a housing loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
Home Purchase Loans
This loan is taken to purchase a residential property, such as flats, rowhouses, and bungalows. Also, the maximum loan amount provided by the banks is 90% of the current market value of the property. But for the NBFCs (Non-Banking Financial Companies), this value is 80%. Moreover, you also require the documents of Property to be purchased while taking this loan.
Eligibility Criteria
Furthermore, the following table is showing the eligibility criteria provided by the leading banks for this loan. Besides this, anyone who desires this loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
| Particulars | Salaried Professionals | Self-Employed Individuals |
|---|---|---|
| Age | 18-65 years | 18-65 years |
| Employment | Min. 2 years of experience | Min. 5 years of experience |
| Credit Score | 750 or above | 750 or above |
Interest Rates
Moreover, here are the interest rates given by the leading banks for this loan.
| Banks | Interest Rate | Processing Fee |
|---|---|---|
| SBI | 8.15% onwards | Up to 0.35% of the loan amount (Min. Rs.2,000; Max. Rs.10,000) |
| HDFC Bank | 8.25% onwards | Up to 0.5% of the loan amount |
| ICICI Bank | 8.65% onwards | 0.5%-1.00% of the loan amount (Min. Rs.1,500) |
| Axis Bank | 8.55% onwards | Up to 1% of the loan amount (Min. Rs.10,000) |
Bridge Loan
This loan can be availed by individuals who want to purchase another property by selling off the existing one. The fund assists in fulfilling short-term fund requirements, for example, down payment for the new house till the old property is not sold off. However, Bridge Loans are usually provided at higher interest rates with a maximum repayment tenure of up to 2 years.
Furthermore, the Bank statement showing repayment of the existing loan and Property-related documents are a must for taking this loan.
Eligibility Criteria
Furthermore, the following table is showing the eligibility criteria provided by the leading banks for this loan. Besides this, anyone who desires this loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
| Age | 18 – 70 years |
| Employment | All property owners and co-applicants |
Interest Rates
Moreover, here are the interest rates given by the leading banks for this loan.
| Banks | Interest Rate | Processing Fee |
|---|---|---|
| SBI | 1st year: 10.35% 2nd year: 11:60% | Up to 0.35% of the loan amount (Min. Rs.5,000) |
Home Construction Loans
This type of housing loan can be taken by the owner of the land to fulfill the expenses of building a new house. This loan can also be availed to complete the construction of an incomplete house. You will also need the property documents while taking this loan.
Eligibility Criteria
Furthermore, the following table is showing the eligibility criteria provided by the leading banks for this loan. Besides this, anyone who desires this loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
| Particulars | Salaried Professionals | Self-Employed Individuals |
|---|---|---|
| Age | 18 – 65 years | 18 – 65 years |
| Employment | Min. 1 year of experience with the current employer | Available for professionals and non-professionals |
| Credit Score | 700 or above | 700 or above |
Interest Rates
Moreover, here are the interest rates given by the leading banks for this loan.
| Banks | Interest Rate | Processing Fee |
|---|---|---|
| SBI | 8.15% onwards | Up to 0.35% of the loan amount (Min. Rs.2,000; Max. Rs.10,000) |
| HDFC Bank | 8.25% onwards | Up to 0.5% of the loan amount |
| Canara Bank | 8.35% onwards | Up to 0.5% of the loan amount |
| DHFL | 9.75% onwards | Up to Rs.20,000+GST |
Balance Transfer
A home loan balance transfer can be taken by a person who desires to transfer an existing housing loan from a bank/NBFC to another provider/lender. Although, the main reason for taking this loan is getting a lower interest rate from the new lender and the availability of a top-up facility.
Moreover, here is a list of some documents required (excluding the common documents) when taking this loan.
- Bank statement showing repayment of the existing loan
- Property-related Documents
- Loan statement and list of property documents in respect to the existing lender
Eligibility Criteria
Furthermore, the following table is showing the eligibility criteria provided by the leading banks for this loan. Besides this, anyone who desires this loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
| Age | 18 – 65 years |
| Employment | Salaried Individuals and Self-Employed professionals who have a clear track record of timely repayments with the previous lender |
Interest Rates
Moreover, here are the interest rates given by the leading banks for this loan.
| Banks | Interest Rate | Processing Fee |
|---|---|---|
| SBI | 8.15% onwards | Up to 0.35% of the loan amount (Min. Rs.2,000; Max. Rs.10,000) |
| HDFC Bank | 8.25% onwards | Up to 0.50% of the loan amount or Rs.3,000 whichever is higher, plus applicable taxes |
| ICICI Bank | 8.65% onwards | 0.50% of the loan amount + GST |
| Bajaj Finserv | 8.55% onwards | Up to 1% of the loan amount |
Home Improvement Loans
This home improvement loan can be taken for renovating your home. Moreover, this loan also includes repairing or refurnishing a house. These loans are very famous because of the low-interest rate. Apart from the common documents, you also require Original Property Title Deeds and Estimated Renovation Quotation while taking this loan.
Eligibility Criteria
Furthermore, the following table is showing the eligibility criteria provided by the leading banks for this loan. Besides this, anyone who desires this loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
| Age | 18 – 65 years |
| Employment | (i) Salaried Individuals (ii) Self-Employed: Available for both Professionals and Non-Professionals |
Interest Rates
Moreover, here are the interest rates given by the leading banks for this loan.
| Banks | Interest Rate | Processing Fee |
|---|---|---|
| PNB Housing Finance Ltd. | 9.25% onwards | Up to 0.35% of the loan amount (Min. Rs.2,500; Max. Rs.15,000) |
| HDFC Bank | 8.25% onwards | Up to 0.5% of the loan amount |
| Canara Bank | 10.80% onwards | Up to 0.5% of the loan amount |
| Bank of Baroda | 8.10% onwards | 0.50% of the loan amount |
Home Extension Loans
This loan can be availed when a person desires to extend or add more space to his house. For example, adding a room according to the growing family needs. Apart from some common documents, you will also need Property/Home extension-related Documents.
Eligibility Criteria
Furthermore, the following table is showing the eligibility criteria provided by the leading banks for this loan. Besides this, anyone who desires this loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
| Age | 18 – 65 years |
| Employment | (i) Salaried Individuals (ii) Self-Employed: Available for both Professionals and Non-Professionals |
Interest Rates
Moreover, here are the interest rates given by the leading banks for this loan.
| Banks | Interest Rate | Processing Fee |
|---|---|---|
| HDFC Bank | 8.25% onwards | Up to 0.5% of the loan amount |
| DHFL | 9.75% onwards | Up to Rs.20,000+GST |
| Tata Capital | 11% onwards | Varies with the loan amount |
Land-Purchase Loans
This loan can be taken to buy land or a plot for construction or as an investment. Moreover, Property-related Documents are also mandatory while taking this loan.
Eligibility Criteria
Furthermore, the following table is showing the eligibility criteria provided by the leading banks for this loan. Besides this, anyone who desires this loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
| Age | 18 – 65 years |
| Employment | (i) Salaried Individuals (ii) Self-Employed: Available for both Professionals and Non-Professionals |
Interest Rates
Moreover, here are the interest rates given by the leading banks for this loan.
| Banks | Interest Rate | Processing Fee |
|---|---|---|
| HDFC Bank | 8.55% onwards | Up to 0.5% of the loan amount |
| PNB Housing Finance Ltd. | 10.25% onwards | Up to 0.5% of the loan amount |
| Bajaj Finserv | 8.60% onwards | Up to 1.20% of the loan amount |
| DHFL | 10.25% onwards | Up to Rs.20,000+GST |
NRI Home Loans
In contrast to the other loans, this loan is quite different. Because this loan can be availed only by the NRIs (Non-Resident Indians) to construct a house or renovating an old property in India. However, the maximum tenure for this loan goes up to 30 years. Also, the interest rate can be fixed or floating.
However, the document requirements for taking this loan varies from the other types of loans. Here is a list of the documents needed while taking the NRI Home Loan.
- Passport as well as work visa copy
- Proof of valid work permit and copy of employment contract
- Current overseas residential proof
- Salary slips of the past three months
- Salary account statement for the past six months
- A general power of attorney and Property papers
- Last year ITR except for NRIs in Middle East nations and Merchant Navy Employees
Eligibility Criteria
Furthermore, the following table is showing the eligibility criteria provided by the leading banks for this loan. Besides this, anyone who desires this loan must meet the necessary conditions to be eligible for the loan. However, these eligibility criteria can be varied from provider to provider.
| Age | 18 – 60 years |
| Employment | Salaried Individuals or Self-Employed with at least 2 years of work experience in the present company |
Interest Rates
Moreover, here are the interest rates given by the leading banks for this loan.
| Banks | Interest Rate | Processing Fee |
|---|---|---|
| PNB Housing Finance Ltd. | 9.25% onwards | Up to 1% of the loan amount (Max. Rs.10,000) |
Conclusion
To conclude, it is strongly recommended that one should choose a loan that has low-interest rates and more benefits. So these are all the home loans available in India. Now one can easily choose among these options as per requirements. Although, the NRI Home Loan is not for everyone. But still, it is also a good option for NRIs. Besides this, whenever you are taking any loan, read the terms and conditions carefully. Before taking a house loan, one must compare the interest rates offered by various banks.
Moving further, apart from these loans, there is a government scheme also which offers houses. Pradhan Mantri Awas Yojana (PMAY) is a government scheme that works to provide housing to everyone. This mission was launched on 25th June 2015.
Besides this, there are also some government loan schemes for businesses. Although, these schemes are quite beneficial for the one who wants to start a business. So to know more about these loans, click here.
Furthermore, you should also take a look at the short term loan as well. Because a short-term loan will benefit you in many ways. So, click here to understand a short term loan in a complete manner.
However, due to the availability of various home loans in India, many people may have some doubts related to it. So let’s have a look at some of the FAQs that are generally in the mind of people.
FAQs
The highest number of joint borrowers for a home loan is fixed at 6. Although, only family members like parents, siblings, and spouse can be co-borrowers for a home loan in India. Moreover, having a co-borrower who has a powerful credit history and good credit score is highly preferred in comparison to the one with a low credit score.
A house loan is a long-term loan because it has 5 to 30 years of tenure. Therefore, lenders need to ensure that they will get their money back in the long term. Hence, the loan sanctioning authority will surely examine your credit history before sanctioning a home loan to you. Because by having a good credit record you would be considered as a low-risk borrower. Also, you will be able to get low-interest rates and waivers on different bank fees on the basis of your credit score.
A person should also consider the margin on a loan while taking a house loan. Moreover, the margin on a house loan is defined as the percentage of the cost of the house which is not covered by the lender. Although, on average, lenders implement a 20% margin on housing loans i.e. the house loan sanctioned to you will be 80% of the actual cost of the property. On the other side, the remaining 20% of the housing loan cost will have to be borne by you. However, the 20% margin is the industry average, providers may increase or decrease it.
COVID-19 Update | Home Loans
Moving further to see the impact of the coronavirus on housing loans. Due to this pandemic, the future of commercial real estate deals comes to hold. Moreover, home buyers are likely to postpone their property buying decisions because they wait for clarity on job security. Besides this, the growth of the housing sector will be heavily impacted. Also, it is not likely to revive till the economy improves. Further, the stress in housing loans, especially in affordable housing loans, will increase.
