Important Facts To Know About Home Loans

Home loans are granted for individuals and it is the individuals’ duty to make the best and wise use of them. If loans are taken for proper purposes and from trustworthy institutions then they prove to be a boon

Loan in simple terms can be referred to a sum of money that is borrowed at a given rate of interest and that has to be repaid after the stipulated time. Loans can be taken for personal purposes or for buying several amenities. The loan that is taken for buying a house is called a home loan.

Home refers to shelter, and shelter is the basic necessity of any human being. No man can carry on his life without a home. Every individual wishes to have a good, luxurious and the best home for himself. In a place like India, to get a house is a great achievement. The rates for properties especially in residential areas are on a rise. Also with the growing competition every individual wishes to buy the best dwelling for himself.

The rates of houses in India have increased to such an extent that it is near impossible for most of the individuals to gather the entire amount to buy a house without any help of outer sources. Here home loans play a significant role. A home loan can be taken from any bank or any financial organization.

At the initial stage, the individual has to pay a sum of money as the down payment which is about 20% of the total sum of money which he desires to borrow. In some cases the person has to give a security against the loan that is given to him. But before granting a loan the bank carries out various policies which help in deciding the eligibility for the loan to be granted. The income of the borrower, the value of the security and the age of the borrower are the main factors which are considered. 

After all these procedures, the amount of Home Loan that is to be given is decided by the financial body granting the loan. The borrower has to pay off the liability within the stipulated time that is given to him. The borrower is supposed to pay the principal amount as well as a given amount of interest.  The rate of interest may be fixed or floating. Fixed rate of interest means that the interest will remain fixed throughout the term of the loan. But from some years this type of interest has a clause according to which the bank can change the rate of interest if required.

In case of floating interest, the rate of interest is not constant. The bank can change the interest according to its will and wish and the borrower has to pay the told amount.

The EMI of the borrower depends upon the interest that is charged by the bank. The interest charged by every financial institution may vary. 

Banks that grant Home Loans have their own policies. It is very important for an individual to have up to date knowledge about the various policies of the banks or any other institutions. A person has to check out all the opportunities and then decide the best package for him. The bank that offers a reasonable amount of interest and offers a lot of time for repayment of the loan is the best option. The borrower should be clever enough to take a wise decision.

Home loans are granted for individuals and it is the individuals’ duty to make the best and wise use of them. If loans are taken for proper purposes and from trustworthy institutions then they prove to be a boon for the borrower in fulfilling his dreams of having the bet dwelling for himself and his family.