Many desire to have own house in Hyderabad. They save money for the purpose. The investment to acquire a house will be the biggest ever investment in one’s life. The maximum amount people would borrow would be to buy a house. Investment on the house would be recurring. People would invest money again and again whether to expanding the existing house or to effect changes to it.
But the salaried class of people or petty traders could not afford such recurring investments. Keeping interests of such persons in mind, banks have been offering long-term home loans. Let us have a look at home loan products and who are eligible to get them and what is the basis for granting them.
The basis for sanctioning home loans is as follows:
1. Salary or annual business turnover
2. Age of the applicant
3. The existing loans of the customer
4. The CIBIL credit score
5. Ability to make a 20% of the cost as down payment
6. Area of the property and technical aspects like permissions
Which is better– fixed rate or floating rate?
Home loan applicants should decide which rate of interest – fixed rate of interest or floating rate of interest – would be better for them. Taking into consideration, financial position and other requirements, the applicants should weigh both the options and finally should exercise either his or her option. Let us see the differences between the two types of interest rates.
When the applicant should choose floating rate of interest..
- If the applicant strongly feels that there is a likelihood of interest rates going down
- If the applicant has no proper understanding about the fluctuations in the rates of interest
- If the applicant wants to save money in future on payment of interest
When an applicant should choose fixed rate of interest?
- When payment of EMI was not a problem at all for the applicant
- When the applicant strongly feels that the rate of interest will go up further
- When the applicant seeks to remain unaffected by fluctuations in the rates of interest
If the applicant is not able to decide which one is better for him or her, they can choose a combination loan. The main feature of it is to have fixed as well as floating rate of interests. If the rate of interest is unprecedently low, the better option would be to choose fixed rate of interest. However, the applicant should take the final call.
Types of home loans
Loan for purchasing house: The loan would be given to purchase a new house, new flat or a row house, bungalow built by private developers and so on. The loan can also be used to buy resale property. The housing loan can be used to buy homes in cooperative housing societies.
Loan for building home: The loan can be availed to build a house on a plot given by urban development authority or a freehold or leasehold property. The prospective builder of the house should have acquired the site within the last 12 months only. If the plot cost is not included in the loan component, the financial institutions will take the estimated cost of the house construction.
Balance transfer: Under which the residual home loan of a bank will be transferred to another bank. If the interest rate on existing home loan is higher that offered by other banks, the customer can transfer the loan to other bank. The bank which accepts the loan transfer will pay off the residual loan amount to the applicant’s bank and takes over the loan.
Loans to repair homes: The changes that occur in weather with time will impact the house. That is why, undertaking repairs to home is necessary from time to time. This loan can be availed to meet the cost of variety of repair works in upgrading the house like putting new tiles, new flooring, to apply plastering and to get the house painted.
House expansion loan: To add one more floor or one more room to your existing house, this loan can be availed. Banks advance loans for the purpose.
Loans to buy plots: Banks give loans even to buy plots too. The loan can be availed to buy a new plot or a resale plot. The loan can also be used to transfer the balance. The banks give only 85 to 90 per cent of the cost of the plot as loan, while the rest would have to be borne by the purchaser.
