India Home Loans

• Interest rates have already fallen to a 10-year low, as banks compete to give the most cost-effective home loans for the festive season of 2021. It must, nonetheless, be perplexing if you are motivated to make a move now and are unsure which bank would be the greatest to secure your home loan in 2021.
• Be aware that the cost-effectiveness of your house loan is mostly determined by the bank you choose to obtain it from. What's more, the bank with the lowest interest rate might not be the ideal bank for you.
• As a result, it may be difficult for a home buyer to choose the finest financial institution from which to borrow a home loan while weighing not just the lowest interest rates but also the entire value of the deal. As a result, choosing the best bank for a house loan is extremely subjective, and the borrower must consider a variety of variables.

Different types of india home loans 

The seven most common house loan kinds in India are as follows:

1. House Purchase Loan

• In India, a home purchase loan is frequently regarded as the greatest and most popular sort of home loan. This loan can be used to purchase a home for personal use or as an investment property. The interest rates on home purchase loans in India typically start at 7.35 percent, and you can borrow up to 90% of the house's buying price.
• Before you buy a house, you can calculate your EMI using a home loan emi calculator. Check the resale value as well, because lenders will look at the location, builder's reputation, and resale value before accepting a loan.

2. Home Improvement Loan

• When you wish to renovate your property, the finest home loan in India is a home improvement loan. Borrowers utilise the funds to make structural repairs to their homes or to refurbish a newly purchased home.
• You can also use the money for electrical, plumbing, or painting projects. These home loans are accessible in India at ultra-low interest rates, and you can return the loan in less than 30 years.

3. Home Construction Loan

• If you own land and want to build your dream home, you can apply for a home construction loan. However, if you do not own land, you can ask for a plot loan to help you pay for the land before you start building.
• The finest home loan in India is one that permits you to switch from house construction to home purchasing with ease. Home construction loans are ideal for realising your long-held desire of buying a home.

4. Home Conversion Loan

• You can apply for a home conversion loan if you have previously taken out a loan for the purchase or construction of a home and want to buy a new one.
• It is the greatest house loan in India for building or purchasing several properties. When you apply for a home conversion loan, your current loan sum is transferred to the new one.
• Home conversion loans, on the other hand, may have a somewhat higher interest rate than the average home loan interest rate in India.

5. Residential Plot Loan

• Plot loans are available to people who want to buy residential plots to build dwellings or invest. In India, plot loan interest rates typically range from 8.35 percent to 10.55 percent.
• Lenders typically approve 90 percent of a plot's purchase price for a loan of up to INR 20 lacs, 80 percent for a loan of 20 lacs to 75 lacs, and 75 percent for a credit of more than 75 lacs.

6. Home Extension Loan

• A house extension loan is an ideal loan in India for people who want to expand their living area. You can use the money to build extra rooms for kids, a kitchen, a guest room, or anything else you choose.
• When you apply for a home extension loan, the lender determines the loan amount based on the property's future value.

7. Loan for NRIs

• An NRI loan can be applied for by any Non-Resident Indian (NRI) or Person of Indian Origin (PIO). The loan amount can be used to build, buy, repair, or renovate any freehold residential property in India.
• Lenders typically approve loans up to 80% of the property's market value, with interest rates beginning at 9.25 percent.

Union bank of india home loan

• *Rate is applicable from October 27, 2021.
• Longest tenure: 30 years
• Processing fees: 0.50% of the loan amount, subject to a maximum of Rs 15,000, plus GST
• Affordability scale: High
• Advantages: There is no cap on home loan amount at Union Bank.
• Disadvantages: When compared to some public lenders, Union Bank has a limited number of branches.

Kotak mahindra bank

• *Rate applicable from November 9, 2021, to December 9, 2021.
• Longest tenure: 30 years
• Processing fees: now none; generally 0.5 to 1% of the loan amount.
• Affordability scale: High
• Advantages: With the Kotak Digi House loan option, you may get fast approval for your home loan. Borrowers should expect sustained benefits because the bank has kept rates at the lowest level in the overall market for the past year and expects to keep the housing financing segment as its primary emphasis.
• Disadvantages: Kotak Mahindra has a lower penetration in India than several public lenders. When it comes to house loans, you must always make personal trips to the branch for a variety of reasons.

Bank of baroda home loan

• *Effective from October 7, 2021, till December 31, 2021
• Maximum tenure: 30 years
• Processing fees: None currently
• Affordability scale: High
• Advantages: Obtaining a loan through an internet platform is a simple process.
• Disadvantage: Borrowing costs will be higher for people with weak credit scores, thus they should look for credit from HFCs or NBFCs. As previously stated, public lenders are notorious for being tardy to provide critical information to their borrowers.

Punjab national bank home loan

• Maximum tenure: 30 years
• There are currently no processing costs. It is usually 0.35 percent of the loan amount, with lower and upper limits of Rs 2,500 and Rs 15,000, respectively.
• Affordability scale: High
• Advantages: The borrower's overall cost is reduced due to the temporary waiver of the processing fee. The bank typically rewards people who have good credit scores.
• Disadvantages: The bank's reputation has taken a hit recently as a result of a huge increase in hazardous loans and its alleged involvement in fraud cases. Borrowers may also find the services to be less customer-friendly than those offered by most private lenders.

State bank of india home loans

• *Rate applicability from May 1, 2021
• Longest tenure: 30 years
• Processing fees are 0.40 percent of the loan amount, with a minimum of Rs 10,000 and a maximum of Rs 30,000 (including GST). The rate will be 0.40 percent for projects where the bank has a tie-up with the builder, subject to a maximum of Rs 10,000 plus taxes.
• However, under the Monsoon Dhamaka offer, if a borrower applies for a home loan between August 1, 2021, and August 31, 2021, SBI will not charge a processing fee on home loans. Borrowers will have to pay 0.40 percent of the house loan amount as a processing fee to SBI after this period.
• Affordability scale: High
• Advantages: If the RBI reduces the repo rate, the government-run bank is always among the first to drop its interest rates. It also makes sense to entrust your borrowing needs to one of India's best-performing banks. Borrowers have another motivation to continue with SBI because of the bank's strong financial position.
• Since SBI recently eliminated the occupation-related interest penalty, it is now charging the same interest rate to salaried and self-employed professionals.
• Disadvantages: Applicants must provide a large number of documents, which is understandable given the bank's stringent due diligence in determining the borrower's creditworthiness. Borrowers with credit scores of 750 and above are also granted the best interest rate.
• Public lenders are occasionally slack in disseminating critical information that could help home loan borrowers. This implies you'll have to keep an eye on news about changes in home loan laws and demand the benefits you're entitled to regularly.

Hdfc bank home loan

• Maximum tenure: 30 years
• Processing fees: Up to 0.50% of the loan amount or Rs 3,000, whichever is higher.
• Affordability scale: Average
• Advantages: The bank is relatively quick to pass on the benefits of policy rate reductions.
• Disadvantages: The process of getting your loan approved may take longer because the bank will require a large number of documents and perform various checks in order to avoid bad loans. Even at the worst of the financial crisis, this was critical in keeping the bank's financial health in control.

Frequently asked questions

Is it possible to buy a house with two loans?

No, you can't have two mortgages for the same house. Any such practice will be regarded as unethical. The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) prevents fraudulent practices like taking out two home loans for the same asset/property.

What is the procedure for obtaining a combined house loan?

A joint house loan can be obtained by including a co-applicant on your application, such as your spouse, parents, or an immediate family member. Adding a co-applicant to your home loan application will improve your loan eligibility because the lending institution will consider the co-income applicant's and credit score when calculating your loan eligibility. All co-owners of the property must apply for a loan as co-applicants. The co-applicants, on the other hand, do not have to be co-owners of the property in question.

Is it possible to deduct my home loan interest from my taxes?

• Yes, you can deduct both the interest and the principal portion of your house loan from your taxes. You can deduct up to Rs.1.50 lakh on the principal amount repaid annually under Section 80C of the Income Tax Act.
• Taxpayers are also eligible for benefits up to Rs.2 lakh on annual interest paid on a house loan under Section 24 of the IT Act.

Who is eligible to apply as a co-applicant?

A co-applicant can be a member of your immediate family, such as your spouse, parents, or even minor children. All co-owners of the property must also be co-applicants when applying for a mortgage. The co-applicant, however, does not have to be a co-owner.

What is Pre-EMI, and how does it work?

The interest that must be paid to the loan provider until the complete loan amount is disbursed is known as pre-EMI. The Pre-EMI is paid monthly until the last payment, after which the standard EMI, which includes both principal and interest, will be applied.