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Home Loan In India

Having your own home is a dream for most of us. But it requires lots of planning, from designing its architecture, constructing from ground up and designing its interiors. Apart from the planning and other things, the most important thing which is required for the construction or for purchasing a house is the money. Due to the skyrocketing prices of the property day-by- day and the demands and needs of housing, the number of financial helping hands also increases, a large number banks and non-banking financial institutions are available in the market with better and more attractive home loans. Home loan comes as a financial hand in an effort to build a dream home.
A home is definitely among the basic needs of livelihood and everyone has certain desires and dreams regarding their living space. However, not everyone can afford their dreams and this is the saddest part of today’s reality. People spend their day and night in a rented space, making their life drowning in a pool of debt.
Going with the housing demands and rising real estate prices, several banks and financial institutions have come forward offering affordable housing loans at competitive interest rates. This makes it possible for people from all walks of life to buy their dream home and live in a space of love and comfort.

What is a home loan?

Basically, a home loan is the money borrowed from any lending institution for buying a real estate property and later paying the borrowed money in easy monthly instalments along with computed interest rate. The loan can be availed either for buying a property or constructing a house. The money sanctioned is for a specific tenure where the borrower assures of repayment of loan in the given period. In case of default payments, certain penalties are charged against the loan. Also, to be noted that the money should be used for the property or real estate-related purposes only.

Types of Home Loans

Home loan is a comparatively a broad category, as it’s not only about a loan availing from a bank or any financial institution for purchasing a new or existing house. But also about the purpose of availing the loan the loan providers are offering Home loans for different purposes according to the changing needs of the customer.

Different types of Home Loan:  
  • Home Purchase Loan
  • Land Purchase Loans or Plot Loans
  • Home Construction Loans
  • Home Improvement Loans
  • Home Conversion Loans
  • Home Extension Loans
  • Home Purchase Loan

    As the name suggests, home loan is particularly preferred for purchasing a home. This loan type is best opted for acquiring your dream living space. It’s better to seek for some expert’s advice to achieve your dream space by opting for a housing loan that is fully transparent, affordable, and flexible with fair terms.

    Benefits of home loan

    Saves from paying rent :   Paying rent is one of the most painful financial burden as you have nothing left in the end. Also, in metro cities, the rent is quite high that puts strain on your monthly budget and makes your living quite expensive. So, instead of paying rent, it’s better to pay affordable monthly instalments against a housing loan.

    Tax benefits :   Home loans are applicable for tax benefits under Section 80C of Income Tax of India, 1971 Act. Tax benefits can be availed up to Rs.2 lakhs, but the benefits can’t be claimed if the property is under construction.

    Balance transfer facility :   In case another lender is offering you home loan at comparatively lower interest rates than your existing lender, then you can opt for balance transfer facility where the outstanding loan is transferred to another lender to avail lower interest rates.

    Home Construction Loan

    If you already have a plot or land, but haven’t completed the construction work due lack of finances, then this loan is typically designed for people who want to construct a house on their already existing land or plot. This type of loan is somewhat similar to housing loan, the only difference is that the loan is used solely for the construction purpose. The entire process of loan is similar. Construction loans are best preferred to design and construct your living space according to your needs. However, certain aspects are considered by the lender before approving the loan request such as providing rough estimation for the construction work.

    Benefits of construction loan

    High value financing :   Constructing a house comes with great expenditure cost and thus, construction loan offers high value financing. One can apply for higher loan amount of up to Rs.3 crore and meet the home construction expenses effectively.

    Flexible repayment :   Borrowers can opt for flexible repayment options and select a convenient instalment schedule according to their monthly budget. Considering this, borrowers can reduce any monetary burden out of their finances.

    Quick loan disbursal :   Usually the loan is sanctioned within 72 hours of approval which makes it great finance option to look for while planning to construct your dream house.

    Factors considered before sanctioning construction home loan:

    Construction plan :   The lender requires the detailed construction plan of the proposed property along with the material details such as tiles, bathroom fittings, circuit fitting, interior, exterior, paint, and so on. Considering the construction plan, the lender approves the loan amount while maintaining the loan margin.

    Property Dealer :   The lender ensures that the dealer or constructor is a responsible person and would duly follow the pre-approved layout plan. The lender also looks for the constructor’s market value.

    Credit score :   Another factor that plays a vital role is applicant’s credit score. An applicant must have good a credit history and CIBIL score at least above 700.

    Land or Plot Purchase Loan

    This loan is specifically suggested for the purchase of land or plot either for construction or as an investment purposes. However, the condition here is that the land or plot should be purchased within one year of loan issuance and for the specified purpose only.

    Benefits of Land or Plot Purchase Loan

    Deduction in interest :   According to the national taxation code, land or plot purchase loan is applicable for sizeable deduction in the loan interest from the tax obligations. This seems to be a great deal for the most property buyers as interest disbursements can be the biggest financial gain.

    Lower stamp duty and registration fees :   In addition to the interest, reduction to stamp duty and registration fees are also allowed under Section 80 C of the Income Tax Act. However, the benefit should be claimed within the same year.

    Flexible tenure :   One thing that makes land or plot loan preferable is the fact that the lenders offer flexible repayment options. This makes it easy for any individual borrower to choose the repayment plan that suits best to their budget.

    Home conversion loan

    If you already own a house or property with an existing home loan, but planning to change your address as of now, a home conversion loan is a saviour at such situations. This loan is ideally designed for existing home loan borrowers who wish to buy another property against the existing property.

    Things to be considered before opting for home conversion loan

    Existing market interest rates :   It is important for the borrowers to keep an eye the existing market interest rates before opting for home conversion loan option. By shopping around for the best interest rates, it becomes easy to make an informed decision.

    Outstanding Loan Amount :   Borrowers need to determine how much outstanding loan amount is left from the previous credit. If the outstanding amount is fairly small, it makes sense to go for a home conversion loan.

    Additional costs :   Borrowers should be aware of the additional costs incurred for the purchase of new house. It happens often that home owners overlook the fact that new home comes with certain additional expenses.

    Cash availability :   Before opting for the home loan, borrowers should ensure that they have enough savings in hand to assure regular loan repayments. This is absolutely necessary as the conversion loan will result in the combination of outstanding and new loan amount.

    Home renovation loan

    Such type of loan is increasingly becoming popular due to the fact that the computed interest rate is almost similar to traditional home loan interest rates. A home renovation or improvement loan can be availed for various purposes such as upgrading electrical system, renovation, furniture upgrade, plumbing, waterproofing, installing new tiles, etc.

    Benefits of Home renovation loan

    Lower interest rates :   Compared to other home loan types, home renovation loan comes with comparatively lower interest rates and follows fixed ROI method. In this way, borrowers can save higher amount for longer loan tenure.

    Flexible EMIs :   Borrowers have a choice to opt for flexible repayment options. This is especially a great benefit for salaried individuals who have limited monthly income.

    Minimum documentation :   Compared to that of traditional home loan, renovation or improvement loans require much less paper work. Usually, the lenders consider applicant’s credit history and CIBIL report before approving the loan.

    Benefits of Home Loan

    Home Loan is one of the biggest liabilities, considering the amount borrowed and long tenure involved. However, a home loan comes loaded with some benefits as well, which are given below-

    Low Interest Rate:   Buying a dream home is a long-term financial decision, which makes it important to look for the interest component as the longer the home loan tenure will be, the expensive your home loan will become. In the market, most of the banks and financial institutions are present which offer home loan to the individuals at reasonable interest rates, to make home loan and make affordable for you.

    Deduction For Interest Paid On Loan:   The most important benefit of availing home loan is that its repayment options, one can easily repay the loan in terms of EMIs (Equated Monthly Installments. EMI has two components namely interest on the loan and principal amount. Under Section 24 of the Income Tax Act, 1961 the interest of the EMI paid for the year can be claimed as a deduction up to a maximum of Rs. 2 Lakhs.

    Deduction On Principal Repayment:   Under section 80C of the Income Tax Act, 1961 the Principal portion of the EMI paid for the year is allowed as deduction and the maximum amount that can be claimed is up to Rs 1.5 Lakhs. But to claim this deduction, the property should not be sold within 5 years of possession. If the property is sold within 5 years of possession, the deduction claimed earlier will be added back to your income in the year of sale.

    Capital Appreciation:   As we all know that the price of the properties are skyrocketing, leads to capital appreciation and becomes one of the major reasons to invest in a property. Not only cost of construction, rents over a period of time seem to keep up with inflation as well; making a dream home is one of the best investments for the long term.

    Proof of Residence

    Lenders cannot just provide you vehicle loan and let you fly off without repaying the loan amount. Banks and financial institutions might not approve your vehicle loan application if your residential address belongs to the city or town other than the city you are getting the loan from. Two-wheeler is a type of secured loan and the lenders need to get assured that the loan amount will be repaid on time without any default. Hence, having the same city residential address can work in your favour.

    A Guide to Choose the Best Home Loan Scheme in India:

    Buying home is one of the biggest milestones of one’s life and this comes with great responsibility too. As choosing the right living space is important, similarly associating with the right lender is significant too. While the financial market is flooded with lucrative loan deals, it is crucial to take a look at certain aspects in order to land into the best housing finance scheme.

    Know your needs:   First and foremost, underline your needs as why you need to avail home loan. Is it either for investment purpose or for constructing your dream space? What would be your budget for the given purpose?

    Research the market:   Based on your needs, research the market to find what scheme suits best to your needs. Choosing a scheme that doesn’t meet your requirements, no way makes any sense and it simply a waste of time and efforts, and money too. Therefore, research the market thoroughly only after zeroing on your needs.

    Holiday period:   Though this is applicable mostly on the purchase of under-construction properties, it is better to look for a scheme with a moratorium or a holiday period. A moratorium is a period during which the borrower isn’t asked to start repaying the loan instalments until the construction is completed. However, during this period, interest on the loan sanctioned starts incurring.

    Online access:   The digital era has changed the way of living and had made it possible to access anything and everything on a fingertip. Financial sector remains no different from this digital growth. Hence, while signing in for a home loan, make sure that the lender offers online loan access facility which allows checking details like tracking repayment accounts, computing interest rates, instalment payments, etc. at a click of mouse.

    Fees and charges:   A home loan is long-term financial commitment and thus, requires a thorough check on everything and anything. Check for the applicable fees and charges like loan processing fees, penalty charges, and pre-payment charges to ensure clear and transparent association with the lender.

    Interest rates:   Interest is the any amount computed on the principal loan amount at the applicable rate of interest. In variable method, interest rate tends to fluctuate according the market conditions, while in fixed method, the rate of interest remains same throughout the loan tenure.

    Is it possible to get home loans with bad credit?

    Credit score is one of the prominent factors that hugely impact your financial health; though it is not mandatory that the score would affect positively or negatively. The lenders first check the applicant’s credit score before processing any loan request. Thus, it is important to first maintain a healthy CIBIL score before applying for a loan.
    But, what if you have a bad credit score and urgently need a home loan? The next thing that comes to mind is – ‘Is it possible to get housing loan with lower credit score?’ So, the answer is yes, though there are certain conditions applied in such conditions.

    Higher down payment:   Usually, the financial institutions consider 700 or above as good CIBIL score, but if the applicant has a score below 700, then the lender may ask for higher down payment from the applicant.

    Cash reserves:   Despite making higher down payment, it’s necessary to have enough cash reserves in hand. This will make lenders assure that the borrower can ensure timely repayments even if any uncertainty hits their door like a hefty medical expense.

    Higher interest rates:   Compared to usual rate of interest, borrowers with low credit score tends to be pay higher interest rates against the home loan.
    Hence, one can surely get a housing loan at a low credit score, but it is advised to first improve the score otherwise you will only get spiralled in a financial debt and it’ll become harder to come out of such situation.

    Home Loan Interest Rates for 2020

    # Home Loan Provider Bank Home Loan Interest Rates Home Loan Processing Fees
    1 Allahabad Bank 8.25% onwards Upto 0.40% of loan amount
    2 SBI 6.95% onwards Nil, Till Dec 2018
    3 HDFC Bank 6.95% onwards Upto 0.50% of loan amount
    4 ICICI Bank 6.95% onwards Upto 1% of loan amount
    5 LIC Housing Finance 6.90% onwards Upto 0.50% of loan amount
    6 DHFL Housing Finance 9.50% onwards Upto 0.50% of loan amount
    7 Axis Bank 7.75% onwards Upto 1% of loan amount
    8 Kotak Bank 7.40% onwards Max. Rs. 10000
    9 Yes Bank 9.35% onwards Upto 0.75% of loan amount
    10 Indiabulls Housing Finance 8.99% onwards Maximum Rs. 5000
    11 PNB Housing Finance 8.85% onwards Upto 1% of loan amount
    12 IDBI Bank 7.80% onwards Upto 0.50% of loan amount
    13 Citibank 7.50% onwards Nil
    14 Bank of Baroda 6.85% onwards Upto 0.50% of loan amount
    15 Canara Bank 6.90% onwards Upto 0.50% of loan amount
    16 IDFC Bank 8.00% onwards Max. Rs. 10000
    17 Dena Bank 8.60% onwards Upto 0.50% of loan amount
    18 Syndicate Bank 8.60% onwards Upto 0.13% of loan amount
    19 UCO Bank 7.85% onwards Upto 0.50% of loan amount
    20 Karnataka Bank 8.35% onwards Upto 0.50% of loan amount

    Charges and Fees Assiciated with Home Loan Offered by Banks/NBFCs in India

    1 Application Fee 8 Franking Fee
    2 Processing Fee 9 Documentation Fee
    3 Notary Fee 10 Recovery Charges
    4 Administrative Fee 11 Balance Transfer Charges
    5 CERSAI Charges 12 Pre-payment Charges
    6 Indemnity Cost 13 Technical Valuation Charges
    7 Legal Fee 14 Loan Tenure Resetting

    Major Factor Responsible for Home Loan Eligibility Criteria

    Factors Eligibility Criteria
    Age Minimum: 18 yrs. Maximum: 70 yrs. (depending on the type of employment)
    Type of Residence Permanent residence or a rented residence where the applicant has resided for at least one year prior to applying for home loan
    Credit Score A credit score between the range 750 and 800 obtained from a recognized credit bureau is considered to be a good score, depending on the bank you are applying at.
    Annual Income Minimum annual income usually ranging between Rs.5-7 lakh (depending on the type of employment)
    Type of Employment Salaried, Salaried Professional, Self Employed Business, Self Employed Professional, Student, Retired, and Homemaker
    Status of Employment Regular: at least 1 yr. in current job/business/profession.; at least 2 yrs. of prior employment
    Type of property being purchased Completed Project, Under Construction Project, Land/Plot, Build on own Land, Buy Land and Build Home

    Different Banks Home Loan Eligibility Details

    Bank Name Age Loan Amount Loan Tenure
    PNB Housing Finance 21 to 70 years Rs.8 lakh and above 1 to 30 years
    HDFC Bank 24 to 60 years Rs.5 lakh to Rs.10 crore 1 to 30 years
    ICICI Bank 21 to 60 years Rs.5 lakh to Rs.10 crore 3 to 30 years
    Axis Bank 24 to 60 years Rs.5 Lakh to Rs.5 crore 1 to 20 years
    Indiabulls 21 to 65 years Rs.2 lakh to Rs.3 crore 1 to 30 years
    DHFL Bank 21 to 65 years Rs.1 lakh to Rs.5 crore 1 to 30 years
    Kotak Mahindra Bank 21 to 60 years Up to Rs.5 Crore 1 to 20 years
    Karnataka Bank 21 to 60 years Rs.20 lakh to Rs.5 crore 1 to 30 years
    Yes Bank 21 to 60 years Rs.10 lakh to Rs.5 crore 1 to 30 years
    LIC Housing Finance 21 to 60 years Rs.30 lakh to Rs.5 crore 5 to 30 years
    Sundaram BNP Paribas Home Finance 18 to 65 years Rs.12 lakh to Rs.5 crore 1 to 20 years
    Canara Bank 21 to 55 years Up to Rs.10 Cr 1 to 30 years
    Dena Bank 21 to 60 years Up to Rs.20 crore 1 to 30 years
    IDBI Bank 22 to 70 years Up to Rs.10 Cr 1 to 30 years
    Indian Overseas Bank 21 to 60 years Up to Rs.5 Cr 1 to 30 years
    DBS Bank 21 to 60 years Rs.50 lakh to Rs.5 crore 1 to 25 years
    Aditya Birla Capital 23 to 60 years Rs.20 lakh to Rs.10 crore 1 to 30 years
    IDFC Bank 21 to 60 years Rs.30 lakh and above 5 to 30 years
    Federal Bank 21 to 60 years Up to Rs.15 crore 1 to 30 years
    Andhra Bank 21 to 65 years Up to 90% of the property value 1 to 30 years
    Dhanalakshmi Bank 21 to 60 years 85% of the property value 3 to 20 years
    Bank of Baroda 21 to 60 years Rs.1 lakh to Rs.2 crore 1 to 30 years
    Bank of India 21 to 60 years Up to Rs.5 crore 1 to 30 years
    Bank of Maharashtra 21 to 60 years Up to Rs.10 Cr 1 to 30 years
    Karur Vysya Bank 21 to 60 years Up to Rs.5 Cr 1 to 25 years
    SBI Home Loan 18 to 70 years Rs.1 lakh to Rs.10 crore 1 to 30 years
    South Indian Bank 21 to 65 years Up to Rs.5 Cr 1 to 30 years
    Tamilnad Mercantile Bank 18 to 50 years Up to Rs.5 crore 1 to 30 years
    Central Bank of India 18 to 60 years Rs.20 lakh to Rs.75 lakh 1 to 30 years
    India Shelter Finance Corporation 21 to 65 years Up to Rs.20 lakh 1 to 20 years
    Aavas Financiers Limited 18 to 65 years Minimum Rs.1 Lakh 1 to 20 years
    Reliance Home Finance Limited 21 to 60 years Up to Rs.5 Cr 1 to 30 years
    Tata Capital Limited 21 to 65 years Up to Rs.3 crore 1 to 30 years
    Jammu And Kashmir Bank 21 to 60 years Up to Rs.50 lakh 1 to 30 years

    Home Loan Rejection Related Do's and Don't

    Do's Don't
    Ensure that you have stable employment Do not have too many ongoing loans
    Ensure that you have researched on the loan you want to apply for Do not blindly sign the documents before you read every term and condition on it
    Submit all the necessary documents Do not submit an incomplete or mismatched loan application
    Read the fine print before taking the loan Do not forget to compare interest rates offered by different loan providers
    Apply for a loan amount you are eligible for Do not request for a change in tenure unless you have considered all the aspects
    Look out for any charges applicable on prepayments and foreclosure Do not default on your monthly payments
    Ensure that you have a good credit score before you apply Do not sign the home loan agreement before reading the clauses
    Make sure you pay the equated monthly instalments (EMIs) on time Do not apply for a loan just for the sake of it

    Home Loan at Zero Processing Fees

    Name of the lender Processing fee
    DBS 0 (nil)
    IDBI Bank -
    Kotak Mahindra 0 (nil)
    Oriental Bank of Commerce 0 (nil)
    Tata Capital -
    LIC Housing Finance Limited 0 (nil)
    Reliance Home Finance Limited -
    Bank of Maharashtra -

    PM Awas yojana

    The Pradhan Mantri Awas Yojana (PMAY) was launched in June 2015 by Prime Minister Narendra Modi with ‘housing for all’ mission. The scheme is an initiative to provide affordable pucca housing facility to the low income class. By the time Nation completes its 75 years of Independence, the scheme aims to provide 20 million houses. The government of India has allotted $31 billion budget for the scheme.

    PMAY is also linked with other schemes including:

    Swachh Bharat Abhiyan – Swachhta Abhiyan is a nation-wide campaign aimed to promote cleanliness across India. The objective of the mission also includes eliminating open defecation through construction of in-house toilets. The Centre has approved a budget of Rs.1.96 lakh crore to complete the construction of around 90 million toilets in rural India by October 2019.

    Saubhagya Yojana – Also called Pradhan Mantri Sahaj Bijli Har Ghar Yojana, Saubhagya scheme is a project aimed to provide electricity supply to every household across India. Under the scheme, every household will get one LED light and one DC power plug along with repair and maintenance of Meter Only (R&M) for next 5 years. By now, almost 21,44,91,777 households have been electrified under the scheme, as claimed by the government’s official website.

    Ujjwala Yojana – Around 10 crore households are still dependent on firewood, coal, dung cakes, etc. as primary source of cooking, causing serious health concerns like several respiratory disorders. This is because the smoke caused from burning such fuels or cooking alternatives is equal to burning 400 cigarettes in an hour. As a precautionary measure, Government launched Pradhan Mantri Ujjwala Yojana aimed to provide LPG to every household. Under the scheme, the government targets to provide around 5 crore LPG connections to BPL families with a subsidy of Rs.1600 per connection in the next 3 years.

    Swajal Scheme – Swajal scheme was launched by the Ministry of Drinking Water and Sanitation aimed to provide accessibility of pure drinking water to meet basic domestic needs on a sustainable basis. The scheme is aimed to cover the districts in six states – Uttar Pradesh, Maharashtra, Uttarakhand, Madhya Pradesh, Rajasthan, and Bihar – in its first phase.

    Jan Dhan Yojana – Pradhan Mantri Jan Dhan Yojana (PMJDY) is a financial inclusion initiative launched by Prime Minister Narendra Modi in August 2014 with an aim to expand access to banking and financial services. Under the scheme, around 318 million bank accounts were opened till June 2018 generating a deposit of over Rs.792 billion in total. Not just this, over 15 million bank accounts were opened in its innuagral day and the even the Guinness Book of World Recorded the achievement stating ‘The most bank accounts opened in one week’.

    Pradhan Mantri awas yojana apply online

    Everyone dreams to have their own living space, but as a hard truth, not everyone can afford to do so and ultimately have to get a living in the slum areas. It may be noted that slum dwellers not only get poor living, but also don’t get access to basic amenities like proper sanitation, clean drinking water, and so on. Thus, the Prime Minister Narendra Modi launched Pradhan Mantri Awas Yojana in 2015 with an aim to provide pucca houses to the weaker sections of the society, while making access to basic living amenities. The government has allotted a budget of $31 billion and targets a construction of around 20 million affordable houses by March 2022.

    Who can apply for PMAY scheme?

    • An applicant must not be above 70 years old
    • Beneficiary or any of their family members should not have any house anywhere in India
    • He or she must be from EWS category having annual income less than 3 Lakhs
    • Beneficiary from Low Income Group must have an annual income between Rs.3 Lakhs to Rs. Lakhs
    • At least one adult female member should have a membership in the ownership of the house.

    Pradhan Mantri awas yojana apply online:

    To get the benefits from the scheme, applicants can apply both online and offline. You can either apply at the Common Service Centres or you can apply online at your comfort and convenience. While applying online, you just need to follow the given below instructions.

    • Visit PMAY official website
    • Select the ‘Citizen Assessment’ option – ‘for slum dwellers’ and ‘benefits under other 3 components’
    • Enter your adhaar card number and submit
    • Fill in the required personal details, mark the disclaimer and submit the Pradhan Mantri Awas Yojana online application form
    • Enter the captcha code and save the application form
    • Your application is submitted

    Is it easy to avail Home loan for pensioners?

    Many believe that retirement is a phase where a person is freed of all their duties, responsibilities, and desires. Though that’s usually a case with many, but not for everyone out there. For instance, if you’ve been living in an office apartment, then post your retirement, you need to hand over the keys to the employer and shift to some other place. This seems to be a daunting situation, especially when you don’t have your own living space. Thus, understanding the need of an hour, several banks and financial institutions have come up with the idea of home loan for pensioners.

    Definitely, it’s a great feeling that one can call a living space their own home. However, as the real estate market is booming, getting a space within a specific budget seems to be challenging, especially when you’re already freed from your professional duties. But, the good news here is that with home loan for pensioners, buying a home seems to be easy and convenient without a nerve-wracking experience.

    So, if you’re looking for a home loan post retirement, here are some tips to help you seal the deal with no hassles.
    • Assign a co-applicant – Assigning a co-applicant ultimately improves the chances of home loan online approvals because the co-applicant’s income is also counted while considering the income criteria. Not just the chances of loan approval, but the loan amount increases as well.
    • Avoid hard inquiries – It’s understood that you’re keen to buy a home, still make sure to avoid hard inquiries in your credit report. Applicant’s credit report plays a major role in home loan application approval. Therefore, before submitting the application, check out the lender’s eligibility criteria or get in touch with the bank’s representative to avoid application rejection. Every rejection or hard inquiry sum ups to a decline in overall credit score.
    • Get secured loan – Pledge an asset against the home loan in order to obtain a secured loan. Notably, secured loan has less chances of application rejection compared to that of unsecured loan, thereby allowing the pensioners to buy their dream home easily.
    • Lower loan to value (LTV) ratio – Even though some lenders offer finance up to 90% of the property cost, it is suggested to keep the LTV ratio lower. Opting for a lower LTV improves the chances of home loan approvals for pensioners.
    • Use EMI calculator – Retirement is a phase where the income is limited to the pension only, so to keep a better financial management, make sure to use EMI calculator to estimate cash outflow per month.
    So, before applying for home loan for pensioners, conduct an adequate research to make the most out of your financial decision.

    Home Loan Top up

    Constructing a house of your dreams is truly exciting. But, what if you suffer lack of funds during the construction period? Sometimes a situation arises when the existing home loan borrower exhaust the approved loan limit. Well, to such situations, home loan top up is the best answer when you need a substantial amount of money.

    What is loan top up?

    Basically, a top up loan is an additional borrowing to the already existing home loan. It is offered to only existing borrowers who have a good repayment track. To no doubt, home top up loan could be the smartest solution when you fall short of the finances during the housing construction. It comes as an efficient financial move both in terms of interest and tenure.

    Many housing borrowers are not aware of the term and facility offered by almost every lending institution and thus, ultimately ends up taking personal loans at higher interest rates to bridge the financial gap. Notably, top up loan is offered at the existing home loan rate of interest, which is quite lower than the interest rate offered at the personal loan.

    Highlights of home loan top up:

    All-purpose loan – What makes top up loans quite efficient is the fact that it can be availed and used for various purposes such as home interior, purchase of consumer durables, buying home appliances, renovating the house design, etc.
    Low repayment cost – Compared to other financial solution like credit card and personal loan, top up loan interest rates are extremely low and are offered at the existing home loan interest rate. This ultimately buckles up into low repayment cost.
    Zero documentation – As the lender already has the borrower’s documents with them, there’s no need to go into the documentation process again. With just a few updates, existing borrower can avail top up loan for no additional paperwork.
    Easy approval – Home loan top up can be easily approved as the lender already has the borrower’s repayment record with them. Also, the bank doesn’t have to perform the verification process and generally uses the previous documents, unless no update has been made to the KYC documents.
    Tax benefits – Just like home loans, borrowers can avail tax benefits on top-up loans as well. However, the funds should be utilized for the home construction purpose only such as home extension and renovation.
    So, this was all about home loan top up benefits. If you wish to built a house of your dreams, but lacks the finances, then top-up loan is the answer to all your needs and desires.

    Bottom line

    Your home is a place where you live moments of love, joy, and sorrow with your loved ones. It’s a comfortable living space that everyone desires for. So, know your needs, choose the best home loan scheme, and build a house of your dreams.