The interest rate on home loans begins at 6.66% per year onward. The range of loans and lenders varies. Home prices are based upon many considerations, including the applicant’s credit score, the loan’s sum, the applicant’s reimbursement ability, and tenure.

Lenders provide home loans at either fixed or floating rates.

Fixed Interest Rates:

The interest rate applied to loan disbursements remains the same over the lending term for fixed-rate. And your EMIs remain stable due to the unchanged interest rate.

Pros of Fixed Interest Rate 

• Since you have an ongoing household borrowing cost, you know just how much interest you pay on a loan, allowing you to manage finances in good time.
• Again, since the rate stays the same over the whole loan period, you would be covered if the interest rate changes every time over the loan duration.

Cons of Fixed Interest Rate 

• The fixed-rate house loans interest rate is typically 1% – 2.5% higher than the rate for floating rate household loans.
• As the loan rate decreases, the fixed-rate stays constant at all points so that you do not benefit from the EMI’s reduction.

Floating Interest Rates: 

In the event of floating home credits, the interest rate can adjust as the related benchmark rate published by the lender (such as Repo Rate) depends, in turn, upon many factors, such as RBI policies and other external factors.

Pros of Floating Interest Rate 

Floating interest rates are lower than fixed home loan rates.

As per RBI’s mandate, your lender can’t charge pre-payment, foreclosure, or exit fees.  

Cons of Floating Interest Rate

• The only problem with the floating rate home loan, which can make managing expenses challenging in advance, is that the EMIs change with the change in interest rate.

Every kind of home loan interest rate has its list of advantages and drawbacks. Choose the one that best serves your needs when deciding between fixed and floating interest rates on home loans.

Top Banks Offering Home Loan at the best Rate of Interest. 

Note: banks, NBFCs, and HFCs can adjust the interest rates in compliance with the RBI directives and discretion of lenders.

Home loans, for various reasons, are available from banks and housing finance companies (HFCs). To determine the criteria to secure a proper home loan scheme before applying for some form of home loan. Below are some forms of mortgage loans:

• Home Loan for New Purchase
  It’s the normal, most frequent form of house loan to purchase ready-to-move homes, houses, and pre-owned properties/resale. According to the RBI guidelines, the loan/value ratio (LTV) of up to 75-90% of property value is given by lenders.

• Composite loan
  It is an ideal solution for you to buy land or a plot for investment or build a house. Your lender disburses the first installment the moment you purchase a land or property. The remaining subsequent payment depends on the construction phase of the house.

• Home loan for construction
  This form of home loan is available for people who want money to buy a house. Your lender only gives a loan if you buy a lot and want to develop a home. As in the case of a composite loan, this all relies on constructing the building.

• Home Improvement Loan
  You can avail of this facility to finance the old house’s renovation and the home restoration costs. This loan’s interest rate is the same as with usual home loans. Its tenure for the loan is, however, longer than the standard home loan.

• Home Extension Loan
  It is for those who need funds to allow their dwellings more space. In compliance with this form of a loan, the financial institution usually lends 75% to 90%, based on the loan volume and the LTV ratio.

• Bridge Loan
  It’s a short-term loan for those who want to purchase a new house using the old residence’s revenue. The loan leads to paying the difference between buying a new home and selling an old one.

• Interest Saver Loan
  It’s like an overdraft service for home loans. The home loan account of the borrowers is linked to their bank account. Any money credited to the bank account more than the EMI amount is paid in advance for the loan to save the interest amount.

• Step Up Loan
  In the initial years of the loan period, you pay lower EMIs.  There is also a clause that the EMI will increase over time. It makes the loan available, just starting their careers, for young professionals.

• Joint Home Loan
  A joint home loan is a mortgage loan made by more than one person to expand access to a household loan and payback reasonably financially. The co-applicants for a Joint Home Loan could be families, including the wife, parents, siblings, or children.

The banks & financial institutions have a home loans program that varies in the eligibility of lending. However, the following are general conditions for qualifying for mortgage loans:

• Nationality: Indian Residents, Non-Residents Indians (NRIs) & Indian Origin Person are eligible. 
• Credit Score: Must be 750 or above 
• Age Limit: In Between 18-70 years
• Total Work Experience: Not Less than 24 months at least (Salaried Individuals)
• Stable Business:  At least for 36 months if you’re a self-employed applicant 
• Minimum Salary or Source of Income: More than Rs 25000/Month (May Vary across locations & lenders)
• Loan Amount:  You can avail of up to 90% of home value if the cost is less than 30 lacs.  In the case, the home cost is greater than 30 lacs but less than 75 lacs, you can avail up to 80% & up to 75% if the property value is greater than 75 lacs. 

Home loan form typically has a checklist of paperwork to be submitted by borrowers. These reports are essentially the same for all loans, although specific particular criteria differ based on the loan system, intent, and credit profile.

Find some of the most common documents required for a home loan

• Duly filled & Signed application form
• 6-10 Passport Size photographs, as required
• Proof of Identity: Copy of any one (PAN Card, Passport, Aadhaar Card, Voter’s ID Card, and Driving License)
• Proof of Age: Copy of any one (Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook, and Driving License)
• Residence Proof: Copy of any one (Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt
• Proof of Income for Salaried: Copy of Form 16, latest payslips, IT returns (ITR) of past three years, and investment proofs (if any)
• Income Proof for Self Employed: Details of ITR of last three years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm, Business License Details, and Proof of Business Address
• Property-Related Documents: NOC from Society/Builder, detailed estimate of the cost of construction of the house, registered sale deed, allotment letter, and an approved copy of the building plan

Note: The list above is indicative; you could inquire for extra documentation from your lender.

There are some extra charges and penalties and the interest rate, which the lender will levy from paying for the house loan before you finally repay it. Most of the charges are here:

• Application Fee: Lenders are responsible for charging all preliminary costs incurred in carrying out the verification.
• Processing Fee: The collateral review cost is protected, which relies on the debt history, salary, and home loan scheme of the borrower. Not all lenders also charge a fee for processing.
• Administrative fee: The lenders who split the processing fee into two pieces would be responsible for it. It’s regarded as the maintenance fee for the share paid since the loan sanction.
• Foreclosure/Payment Charges: You’re entitled to pay the fee if you pay the home loan in full or half before completing the loan term. Previously, lenders used to impose foreclosure fees for prepayment and foreclosure. However, RBI barred lenders from imputing fines on floating rates of home loans to individuals. Concerning household fixed-rate loans, specific lenders collect certain expenses.
• Repayment Mode Change Charges The charge you need to pay whenever you order your lenders will change their current repayment methods within the loan term. The fee is typically Rs. 500 per instance or swap and varies between lenders.
• Rate Conversion & Switching fee: You fee this charge when you request your lender to switch or reduce the existing rate of interest due to any reason. The fee can vary with every lender & can go up to 2% of the outstanding principal amount.
• CERSAI Fee: Central Registry of Securitisation Asset Reconstruction and Security Interest is India’s central online list of security interests. CERSAI website prospective lenders to verify whether any other lenders do not demand the pledged asset. The lenders pay a small sum for this method and eventually charge from the borrowers.
• Overdue Charges: Suppose you miss or extends payments in the due period of EMI loans. It attracts penal interest rates above the current interest rates on deferred dues and overdue installments. Borrowers must then pay EMI loans on budget.
• EMI Bounce Fee: Suppose your bank was unable to debit your bank account immediately due to inadequate money. Lenders typically levy Rs. 500 on defaults that may differ between lenders.
• Legal Fee: The fee is generally included, but some lenders bill it individually as businesses check the borrower’s legal records. 
• Franking Fee: The fee, which the State government charges on some money exchange that includes a transfer of land rights, is also referred to as stamp duty fee. The number depends on state rules, a form of land, etc. It varies between States.

Apply for a home loan at Fair Fincorp takes less than 2 minutes. Yes, all you’re supposed to do is call the helpline +91 989 766 6966 & one of the experts will help you start the journey. 

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