Buying your own home is one of life’s greatest milestones. It is not easy considering the sheer amount of options despite rising property rates. Home loans make it easier to bridge the gap between what you want and what you can pay for. The financial burden of a perfect home can be relieved with easy repayment options and several tax benefits. Despite being a huge liability, home loans offer considerable benefits at low interest rates.
In India, the home loan sector always sees brisk business because of the country’s rapidly growing economy and awareness among common people. Government focus on housing has also helped. The Pradhan Mantri Awaas Yojna is a good example. Several banks and financial institutions compete to attract potential home buyers. It is important to learn more about these offers from the top home loan providers in India to understand the best possible alternatives. An explanation of home loans provided here has all the necessary information to help you get started.
Home Loan Eligibility:
Any type of secured or unsecured loans follows certain eligibility criteria to ensure that only qualified borrowers are approved so that the process of repayment remains as complacent as possible.
The eligibility criteria for home loans in India as follows:
| Eligibility Criteria | Salaried | Self-Employed |
| Age (Years) | 24-60 | 24-65 |
| Minimum Income (Annual) | Rs. 1,80,000 | Rs. 1,50,000 |
| Preference | Bank Account Holders are preferred | Current or Savings bank account in the same bank are preferred |
| Employment | Full-time job with at least 2 years of experience | 4-5 years of experience with good turnover |
| Co-Applicant | Not Mandatory but family members are preferred | Not mandatory but family members are preferred |
| Basic Documentation | Bank account statement/ latest telephone bill/ latest electricity bill/ latest credit card bill/ employer’s letter certifying current mailing address/ valid passport mentioning present address/ Adhaar Card/ Existing registered house lease/rent agreement | Bank account statement/ latest telephone bill/ latest electricity bill/ latest credit card bill/ Adhaar Card/ valid passport |
| CIBIL Score | Minimum of 750 or above | Minimum of 750 or above |
Documentation: Appling for loans is a complicated process and applicants are required to have a variety of documents ready to ensure the process is quick and trouble-free. People often ask why so many documents are required to state your credibility as a borrower. But every document is required by law to ensure transparency and authenticity.
You have to submit a duly filled application form with identity, residence, and age proof along with bank statements for the last six months, salary slips of last three months, a processing fee cheque, form 16/documents of income tax returns, proof of business existence, business profile, educational qualification certification, last three years of income tax returns with computation of income, and last three years of CA certified and audited balance sheet/profit-loss account.
Dos and Don’ts of Home Loans
There are a number of aspects that you have to consider while taking out a home loan. Here is a brief explanation of some of the dos and don’ts that you should follow.
Dos:
- You have to make sure that you are completely aware of your true financial condition. It is necessary because you need to repay the loan within the given time period. Late or missed payments lower your credit score in addition to incurring fees and charges. You have to ensure that you have everything checked and recorded so that your loan approval process is fast and easy.
- Make sure that your debts such as an outstanding credit card balance are paid off in full so that there would be no negative mark on your credit history.
- You have to make sure that the house you are looking to buy satisfies all the legal obligations and it has a clear title as well. These things will affect your purchase largely in the case of resale of the property. In addition, you have to see to it that the Agreement To Sell (ATS) is in record of the concerned authority because the loan amount will be sanctioned according to the sale amount based on the ATS.
Don’ts:
- Do not assume that the interest as the only cost of your home loan. There are other charges such as stamp duty, prepayment charges, registration fee, and processing charges that might seem too small to matter but will affect your overall cost for the loan. When taken together, they can add up to a considerable sum that you must account for.
- Do not make major purchases right before taking out a home loan. It will affect your financial corpus for making the down payment. Also, try to avoid buying such things on credit as well because this will affect your credit history significantly as well as add to your financial burden.
Top 5 leading Home Loan Providers in India:
In India, there is no scarcity of institutions that provide home loans. Some are obviously more popular and trusted among consumers. Several factors determine the market leaders–their quality of services, easy processes, and reasonable interest rates.
SBI: SBI Home Loans are of two types – Term Loan and Max Gain. The Term loan scheme has fixed interest rates for 2 years for loans up to Rs. 30 lakh. The Max gain scheme offers loan above Rs. 75 lakh on which interest is applied with floating rates. For the term loan scheme, the interest rates are 8.55% whereas Max gain scheme interest rates are 9% and 1% above 1-year MCLR. In terms of market share for the home loan market, SBI has the largest cut at 29.6%.
PNB: Punjab National Bank is a leading consumer favourite for home loans. PNB offers home loans at interest rates ranging from 8.65% to 8.75% with maximum loan tenure of 30 years. The market share of PNB is 26.83%.
ICICI: ICICI offers home loans with interest rates ranging from 8.7% to 8.85 for general borrowers. They have special schemes for women borrowers ranging from 8.65% to 8.80%. The market share of ICICI in the home loan sector is 15.9% which is considerable for the private banking sector.
HDFC: HDFC’s USP is the versatility of its schemes and interest rates in their home loan segment. For women, HDFC Home Loan interest rates range from 9.4% to 9.9% on floating rates on regular loans. On their Trufixed loans, fixed interest rates are applied for 2 to 3 years and range from 9.5% to 10%. For other borrowers, the interest rates vary between 9.45% and 9.95% for floating rates. Trufixed loans fix interest rates for 2 to 3 years and range from 9.55% to 10.05%. HDFC home loans account for 16.6% of the total home loan sector in India.
DHFL: DHFL is considered a bold player in the industry as they are already giving out huge loans. The interest rates of DHFL range from 8.60% to 9.75% for up to Rs. 5 crore. DHFL is a new entrant and their current 3.7% home loan market share is expected to grow over time.