Home loan is the most popular type of loan in India which is availed for purchase of your dream house. You can apply for home loan with banks, reputed housing finance company (HFC) or NBFC. Lenders offer home loan at very low interest rate as compared to other types of loans in India and we can say that home loan is available at the lowest rate in the entire loan industry.
Home Loan is a Secured Loan where the house property purchased out of it is pledged with the bank as collateral for getting the loan. If the borrower is unable to repay the loan then the lender has the authority to auction off the house property and recover the outstanding loan amount.
Home Loan Tenure ranges from 5 years to 30 years depending upon your eligibility, requirement and lender's decision. It is decided during home loan approval process.
There are many banks, NBFCs and housing finance companies that offer home loans for a variety of purposes apart from just purchasing a home. Outlined below are the most popular categories of home loans in India:
Gramin Bank or Regional Rural Banks (RRB) are Indian scheduled banks operating at regional level in different states of India. The main idea behind creating them was serving primarily the rural areas of India with basic banking and financial services.
Currently, there are total of 56 Gramin Bank or Regional Rural Banks (RRB) in India. Majority of them are offering home loans to their customers.
Below table will show you the list of all Gramin Sector Banks who are extending home loans with their interest rates and tenure. This table will be offering you a chance to pick a bank of your choice under one roof:
|Andhra Pradesh Grameena Vikas Bank||8.30% - 8.35%||15 Years|
|Andhra Pragathi Grameena Bank||8.95%|
|Assam Gramin Vikash Bank||8.90%|
|Baroda Gujarat Gramin Bank||8.65%- 9.25%||25 Years|
|Baroda Rajasthan Kshetriya Gramin Bank||8.50% - 9.25%||30 Years|
|Bihar Gramin Bank||10.20%|
|Central Madhya Pradesh Gramin Bank||9.90% - 10%||25 Years|
|Chhattisgarh Rajya Gramin Bank||8.20% - 8.40%||30 Years|
|Dena Gujarat Gramin Bank||8.60%|
|Gramin Bank Of Aryavart||10% - 11%||15 Years|
|Jharkhand Gramin Bank||10.25%||30 Years|
|Karnataka Vikas Grameena Bank||8.75% - 9.00%|
|Kashi Gomti Samyut Gramin Bank||9.60% - 10.00%|
|Kaveri Grameena Bank||9.50% - 11.25%||30 Years|
|Kerala Gramin Bank||8.87% - 9.95%||30 Years|
Fixed Rate Loan
In this type of loan, the rate of interest remains fixed either for the whole tenure of the loan or for a certain period say 3 years out of the entire tenure of the loan. In case of a pure fixed loan, the EMI due to the bank remains constant and is known in advance. It does not change with the market fluctuations. It is usually 1% to2.5% higher than the floating rate home loan. It is more attractive in a high interest regime.
Fixed rate loans generally come with the 'reset clause' which means it is subject to revision from time to time.
Floating Rate Loan
Now-a-days, people as well as banks prefer this type of home loan interest rate. It is linked to MCLR and the interest varies along with changes in MCLR. Floating rate of interest is a spread over MCLR i.e. floating rate = MCLR + spread.
People generally look for interest rate charges and compare different lenders based on interest rates offered by them. But in reality, it should be remembered that there are host of other fee & charges associated with home loan which make considerable addition in total cost associated with the home loan.
Various fee & charges applicable to home loan include Loan Processing charges, documentation charges, administrative charges, pre-payment penalty, late payment penalty, changing from fixed to floating interest rate and vice versa, stamp duty, charges for change in loan tenure, restructuring of home loan, audit/ inspection fee, legal fee, document retrieval charges, insurance charges, etc.
You can repay home loan in any of the following methods:
(1) Electronic Clearing Service (ECS): Electronic Clearing System is preferred for faster payments and collections. You will have to fill up a form and submit the same with your bank for debiting EMI every month from your account. In this case, your EMI will be automatically debited every month from your bank account and credited to loan account towards loan repayment instalment.
(2) Standing Instruction (SI): Under this method, you will have to issue a Standing Instruction to your Bank to debit your EMI amount on a due date every month from your Canara Bank account and credit to Canara Bank loan account towards loan repayment instalment. You save a lot of time and energy by giving standing instructions to the bank to carry out the transaction on your behalf each time.
(3) Post-Dated Cheques (PDCs): In this method, you need to submit post-dated EMI cheques to the lending bank for a certain period of time, which are deposited by the lending bank on the due date. This alternative is cumbersome and time-consuming and involve a manual procedure of visiting the lender in a timely manner.
It is always beneficial to add a co-applicant to your home loan application which will increase your home loan eligibility. You can also take a joint home loan since the tax deductions on home loans are available per person and not per property. So, if you take a home loan jointly, all the joint holders will be eligible to claim the tax deductions separately.
One should also make sure that he is able to pay the monthly EMIs and never becomes a defaulter, otherwise, it will hamper his credit score adversely and it will be very difficult for him to avail any loan in future.
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