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How to apply for home loan

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There are many types of home loans and their terms are also different. Home loan interest rates also vary depending on the home loan schemes. In this article, we will tell you what is a home loan (Home Loan kya Hai), how to get a home loan (Home Loan Kaise Milega), and how to get a loan on low interest rates (Home Loan on Low-Interest rates) and why the bank Accept and reject any home loan application.

Almost all banks and many Housing Finance Companies (HFCs) offer home loans for the purchase of a house / flat / land. Home loans are generally offered for a tenure of up to 30 years depending on the applicant’s credit score, monthly income, loan amount, loan to value (LTV) ratio, job profile, employer/company profile, etc. The loan amount ranges from 75% to 90% of the home property value depending on the credit profile of the applicant and the LTV ratio prescribed by the bank/lending institutions.

How to apply for home loan

home loan emi calculator

Use Paisabazaar’s home loan EMI calculator to calculate your home loan EMI instantly. The online loan calculator tells you the EMI you will have to pay based on the principal amount, interest rate and tenure. The loan calculator also tells you how much interest you will pay over the entire repayment tenure. If you know its EMI before taking the loan, then you will know how much burden is going to fall on your pocket.

Home Loan Types

Banks/lending institutions offer home loans for different purposes. So before applying for any type of home loan, find out what you need the loan for. Following are some of the types of home loans available:

Home Purchase Loan: This is the most common home loan availed for buying ready-to-move-in properties, under-construction properties and pre-owned homes/resale properties. As per RBI guidelines, banks/lending institutions can offer home loan amounts up to 75-90% of the property value.

Composite Loan: It is suitable for individuals who want to buy a plot either for investment or for construction of a house. In this type of home loan, the first installment of the loan amount is transferred to purchase the plot. Then, as the house gets ready, you keep getting the loan amount.

Home Construction Loan: This type of home loan is for those individuals who need money to construct a house. This loan is given only if you already have land and want to build a house on it. Like a composite loan, under this too the home loan amount is transferred as per the stages of construction of the house.

Home Renovation/ Improvement Loan: This loan can be availed to meet the expenses related to renovation and repair of the existing home. The interest rate for this loan is the same as that of a regular home loan. However, its loan tenure is shorter than that of a regular home loan.

Home Extension Loan: This is for those who need funds to add additional space to their home. Under this type of loan, banks/lending institutions usually lend 75-90% of the amount for which the construction of the house will be completed, depending on the loan amount and LTV ratio.

Bridge Loan: This home loan is provided for a shorter tenure. It is suitable for those who want to sell the existing house and buy a new house with the proceeds. You can avail a bridge loan to cover the difference between the selling and buying amount.

Interest saver loan: This is similar to home loan overdraft facility. In this, the borrower’s home loan account is linked to his bank account. Any amount deposited in the bank account over and above the EMI amount is used as prepayment of the loan. Thus, the interest amount is also saved.

Step Up Loan: Under this, the borrower pays a lower EMI in the initial years of the loan tenure. However, the EMI amount tends to increase over time. This makes the loan affordable for young professionals who have just started their career.