Funding Your Rise Through Property Ladder With Home Loan
By Steve C Clark
A new home brings with it new hopes, joys and emotions and therefore ‘a home of my own’ is a dream of most of us. However, since it is precious, so it is costly too. At times, a person may not be able to buy a home through his own salary and savings. The professional lenders, such as banks, can provide such people a loan, depending upon the profile of the borrower to purchase house. Home loan is a category of loan offered by lenders, usually banks and housing finance companies, to borrowers who either want to purchase or construct a house. A common feature of home loan is that the loan is secured against the asset created through this loan, the home. Home loan lenders charge certain interest on the amount of loan offered, and the principal and the interest can be repaid by the borrower/home owner in installments spread over certain years.
Purpose of home loan
Home loan is taken for various purposes like the purchase of a Flat, row house, bungalow from developers or Existing freehold properties or Properties in an existing or proposed co-operative housing society or apartment owner’s association
Self Construction
Key features of Home Loan
Maximum loan: It varies according to the profile of the borrower but usually falls in between 80%-125% of the cost of the property (including the cost of the land) and based on the repayment capacity of the customer. In terms of amount, it remains in between 7,500 to 75,000.
Rate of interest: This also varies according to the risk associated with borrowers.
Maximum Term: Again varies according to the borrowers’ profile but usually remains in-between 5-25 years subject to retirement age.
Applicant and Co- Applicant to the loan: Home Loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be coowners.
Adjustable Rate Home Loan: Few lenders offer this facility in which Loan under Adjustable Rate is linked to Lender’s Retail Prime Lending Rate (RPLR). The rate on your loan will be revised every three months from the date of first disbursement, if there is a change in RPLR, the interest rate on your loan may change. However, the EMI on the home loan disbursed will not change. If the interest rate increases, the interest component in an EMI will increase and the principal component will reduce resulting in an extension of term of the loan, and vice versa when the interest rate decreases.
Processing Charge: This fee depends upon bank to bank and borrower to borrower. Most common charge is 1% of the loan amount applied plus applicable service taxes and cess. But at times, lenders waive off such charges in specific situations such as:
Part or Full Prepayment of loan under Adjustable Rate (except in case of prepayment through a refinance from other bank or institutions prepayment charges will be applicable)
Fixed Rate – Part prepayment up to 25% of opening loan outstanding in a financial year
Replacement of cheques
Accelerated Repayment Option
Eligibility for availing home loan:
The eligibility criteria are:
The applicant should be adult. In case of maximum age, lenders have individual term, which most commonly is 65 years at the time of loan maturity.
The applicant should have a regular source of income.
Documentation: The documents required are:
Passport size photograph of all the applicants
Residence and age verification.
Bank statements
Latest salary slip/statement showing all deductions in case of employed applicants
Certified copies of Balance Sheets and Profit and Loss accounts, for self-employed borrowers.
Steve Clark can tell you how to look better, live better and breathe better by giving you tips to improve your finances. He writes on loans. His ideas can help you rejuvenate your money. To find Personal loan UK, secured loans, unsecured loans visit http://www.ezpersonalloansuk.co.uk
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