Home Loans in India - A Look at Aspects of Borrowing Finance

Posted by Robbin K on August 5th, 2016

With the income of middle class people in India increasing rapidly, buying home has become one of the top priorities for them. So, one can see construction of homes going on everywhere. These homes are being provided through loans. Home loans in India have therefore become inevitable for buying homes. They are being given in India for variety of purpose including buying or constructing a new home, for buying plots and these are given also against mortgage of property.

While taking a home loan, one should note that the lenders in India first of all go through borrower's existing financial status. This is in order to have a deep look at borrower's actual repaying ability so that timely repayments towards the installments can be ensured. So, the borrower must approach a lender with all documents that prove his earnings.

In India, banks, public sector housing financing companies or from financial institutions are main source of home loans. Housing finance companies sanction up to 80-85 percent of the home cost. The borrower is required to place a certain percentage of the loan as down payment. Rest of the repayment of them is made through installments that include interest on them. But the borrowers should be prepared to offer collateral securities to the lender for housing loan. These securities include guarantee form one or two persons, life insurance policies assignments, share or unit deposits or any other securities.

You must also be aware of interest rates. In India, both fixed and floating interest on housing loan are being offered to the borrowers on the fixed rate allows for a fixed payment towards the interest throughout the loan duration. Floating rate may fluctuate as per existing market interest rate. Be careful in opting for a rate keeping your circumstances in mind.

As far as repayment of home loans is concerned, there are many options available to the borrowers as per their personal circumstances. The home buyers in India have conventional EMI repayment method for clearing installments. But this method may or may not suit to all borrowers as their circumstances vary. There are banks which offer variable monthly installment scheme. This repayment plan is flexible for a salaried borrower and allows for paying lower portion of the loan in the initial stage of the loan and as the salary increases, the borrower can repay greater portion of them later. This plan facilitates for repaying greater loan and is more convenient than EMI based repayment plan. Those borrowers who are going to retire, they can repay greater portion of the loan early as they can support the repayment through monthly salary. After they have retired they can choose to repay smaller portion.

[Source: http://ezinearticles.com/?Home-Loans-in-India---A-Look-at-Aspects-of-Borrowing-Finance&id=807908]