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In a 10-year loan, the interest paid is 57% of the borrowed amount. While technology has altered the way loans are being disbursed, the canons of prudent borrowing remain unchanged. It still doesn’t make sense to borrow if you don’t need the money. Or take a long-term loan only to enjoy the tax benefits available on the interest you pay. Our cover story this week lists out 10 such immutable rules of borrowing that potential customers must keep in mind.
By clicking "Proceed" button, you will be redirected to the resources located on servers maintained and operated by third parties. SBI doesnt take any responsibility for the images, pictures, plan, layout, size, cost, materials shown in the site. As a thumb rule, keep the EMI within 50 percent of take-home pay and have a prepayment plan in place.
What are the different types of Home Loans available in India?
However, this is not in the best interest of the borrower. Any extension in EMI increases your overall interest payable amount. You can easily save this by asking your lender to keep the tenure intact as you are ready to pay higher EMIs.
As a result, self-employed borrowers can automatically qualify for house loans at a higher rate. Unless they can demonstrate that they have another reliable source of income, a person who is going to retire is typically ineligible for a home loan. Home loan is a form of secured loan that is availed by a customer to purchase a house. A housing loan is repaid through equated monthly installments which consists of a portion of the principal borrowed and the interest accrued on the same. Home loans have one of the lowest interest rates as compared to other loan products such as auto loans and personal loans.
Application Status
You may be getting SMSs from your credit card company for a travel loan, but such wants are better fulfilled by saving up. “It’s not a good idea to take a personal loan for buying luxury watches and high-end bags,” says Vineet Jain, founder of LoanStreet.in. If you must go on a holiday, throw a lavish party or indulge in some luxury shopping, start saving now. If you take a Rs 50 lakh loan for 25 years, you will pay Rs 83.5 lakh (or 167%) in interest alone. The longer the tenure, the higher is the compound interest that the bank earns from you,” warns financial trainer P.V. Answer – The maximum home loan tenure offered by HDFC Bank in 2022 is 30 years.
Our home loan experts are available to help you in your loan application process and offer you assistance every step of the way. HDFC will determine your Home Loan Eligibility largely by your income and repayment capacity. Other important factors include your age, qualification, number of dependants, your spouse's income , assets & liabilities, savings history and the stability & continuity of occupation. With this option you get a longer repayment tenure of up to 30 years.
Approval & Disbursement of Home Loan
In turn, the cost of borrowing increases your overall cost of the property. I receive many queries on what should be the ideal Home Loan Tenure?. As a borrower, you need to arrive at the optimal value which should be a fine/comfortable balance between your current financial condition and your Home Loan requirement. The home loan providers i.e. banks/HFC’s push for longer home loan tenure as it is financially beneficial for them. The best sales pitch is that EMI is low for 30 year Home Loan compared to 20 year Home Loan.
So, you should pro-actively decide the tenure of the loan as per your capability. Having too many ongoing loans will not only impact your personal finances but also your repayment capacity. Hence, it is advised to clear the ongoing loans, if any, before you apply for a housing loan. Our EMI calculator helps you calculate the amount you have to pay the bank every month. Input your loan amount, tenure, interest rate, and processing fee to get your EMI and loan amortisation details. Bank of Maharshatra’s home loan has the lowest interest rate in India and no processing fee, making it the cheapest home loan.
Home Loan Fees and Charges
In addition to that, the banks and lenders will be considering your present liabilities, income, assets, etc. while calculating your home loan eligibility. In case the mortgage requirement is slightly higher that the eligible loan amount, some changes in the way you present yourself can help in increasing the eligibility factor. Home Loan Tenure is one of the most crucial decision making factor during Home Loan Process. Home Loan Tenure has a direct impact on your cost of borrowing.
The sole recourse the lender has in the event of a default in debt servicing is the house, which is pledged as security for the mortgage. As a result, the lender will not grant a mortgage for some time greater than the remaining useful life of the property you wish to purchase. Most long-term loans have terms of five years or more. Longer tenure would also help enhance loan eligibility because long-term loans last for a considerable time. Many borrowers who have short tenure home loan like 15 years or below, lenders may offer the tenure extension option.
State government employees who wish to buy a plot and construct a house or buy a ready-built house can also avail of this scheme. The loan limit will be determined on the basis of the employee’s gross salary and will be subjected to a maximum loan amount of Rs.40 lakh. A maximum advance amount of Rs.40 crore will be sanctioned per year on a first come first serve basis. A joint home loan can be availed by adding a co-applicant such as your spouse, parents, or an immediate family member on your application. All co-owners of the property are required to be the co-applicant for a loan.
In case of construction, home improvement and home extension loans, 75 to 90% of the construction/improvement/extension estimate can be funded. “Salaried profiles within age group of years and self-employed professionals and business class profiles within age group of years are best suited for long tenure loans. Most lenders offer Home Loans for a maximum period of 15 years depending on your repayment capacity, profession, etc. But that is not restricted as it depends on the lender only, they can even extend it up to 20 years depending on the profile.
To transfer your rights to take decision on your behalf to your co-applicant you will need a Power of Attorney. For this you would have to visit the Indian Embassy to get it registered from the country you are residing in. The format of the Power of Attorney is not something that you can choose on your own as every lender has their own specified format of the same. Then you will have to send the registered copy to the lender to process your application. Although it is not mandatory to have a co applicant or co-borrower in the guidelines issued by RBI. But most lenders insist on having one as the applicant is not a resident of India and lender may need someone to deal with, if any property related issues crops up.
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