Most people dream of purchasing a home. However, the steep rise in the price of real estate has made it impossible for many individuals to bring their dreams to life. This is when a Housing Loan can be helpful. Here, we answer a few FAQs about this Loan.

What is a Housing Loan?

A Home Loan is secured and lets you borrow funds from a bank to buy a resale or new house, extend or renovate an existing home, or construct a new house. The bank lends the money at a specific Home Loan interest rate, and you need to repay it in smaller instalments over a particular tenure. When you opt for a Housing Loan to buy a property, you need to offer it as collateral. Once you repay the Loan, the property’s title will be transferred back to you.

What is the Home Loan equated monthly instalment?

The Home Loan EMI is the regular payment you need to make to the bank to repay the Loan within a particular duration. It includes the principal amount and the interest component. The EMI amount dictates the affordability of your Home Loan. In the initial Loan repayment period, a higher percentage of the EMI is spent on paying the interest component while the rest is diverted to the principal amount.

What are the different types of Home Loans in India?

The various types of Housing Loans you can avail yourself of in India based on your housing needs include:

• A Standard Home Loan lets you buy a residence of your choice.
• A Home Improvement or Renovation Loan is used to renovate an existing home.
• A Home Extension Loan can enable you to add a floor or room to your existing house.
• If you own a piece of land and want to build a home, you could consider a Home Construction Loan.
• A Home Loan Balance Transfer lets you switch to a different bank for better Loan terms.

What are the benefits of applying for a Home Loan?

The various benefits of a Home Loan include the following:

• Since you can repay your Housing Loan in easy monthly instalments or EMIs, it can make buying your dream home easier.
• You can enjoy tax benefits by availing yourself of a Home Loan.
• Buying a home with a Housing Loan can save you from paying rent. Instead, you can pay your EMIs and own a house.

What documents do salaried professionals need to apply for a Home Loan?

Salaried professionals usually need to provide a few of the following Home Loan documents when applying for the Loan:

• Latest salary slips
• Bank statements
• Form 16
• KYC documents

You may also need the employer’s certification to validate your income details and employment status.

Conclusion

Now that you know the answers to these frequently asked questions about a Housing Loan, you can conveniently determine your needs and apply for this Loan when buying a house.