Are you already considering getting a house? This blog provides you with information regarding housing finance. Here we will go through different types of loans, government schemes to save money and how to select an appropriate type of loan. Let’s begin and make your dream of buying a home a reality!
What is Housing Finance?
Housing finance refers to the loan options available for the purchase of a property. There are a plethora of housing loan providers available in India; banks, housing finance companies (HFCs), Non-banking financial companies (NBFCs), etc. They usually provide funds that cater to a major part of the property’s cost as the borrower pays back the sum of the funds borrowed followed by interest charges in equal installments over a specified period.
Types of Housing Loans
Home Purchase Loan: This is the most prevalent form of housing loan where the amount borrowed is utilized to purchase an existing or new house.
Loan for Land Purchase & Construction: This loan assists in the acquisition of a plot on which a home is built.
Home Improvement Loan: This loan is applied for the renovation of a property that is already in existence or perhaps for the expansion of the same property.
Balance Transfer Loan: This loan can be used to transfer the existing housing loan with a new financier to secure a lower interest rate.
Factors Affecting Housing Loan Eligibility
Credit Score: Credit score is an essential factor in the assessment of your creditworthiness and determines the loan terms and rates.
Income & Employment: Income stability and repayment abilities are something lenders consider in order to recover their money.
Loan-to-Value Ratio (LTV): This is a loan value-to-property value ratio which enables financiers to know how much of a loan can be given. This means a lower LTV typically gets a better interest rate.
Down Payment: Paying a larger initial amount of money decreases the loan sum that will be needed and improves the loan request.
Government Schemes for Affordable House Financing.
The government of India has recognised the necessity of housing and offers several schemes to make housing more attainable. Candidates opting for Pradhan Mantri Awas Yojana (PMAY) can avail interest subsidy on home loans, which again is split into EWS & LIG, and MIG. For instance, there is a PMAY subsidy calculator on the internet that helps prospective homeowners approximate the amount of subsidy they stand to benefit under the PMAY.
Securing the Best Housing Finance
When it comes to selecting the best housing loan, there are so many lenders and packages to choose from. Here are some key considerations:
Interest Rate: Choose a type of loan with a propitious interest rate to ensure a reasonable loan cost.
Loan Tenure: Select a tenure that you are confident of repaying and align with your repayment capability.
Processing Fees & Prepayment Charges: Consider the processing fees as well as any prepayment charges that relate to the loan type.
Conclusion
Purchasing a home can be one of the biggest individual achievements. It is crucial to gain knowledge of housing finance and features of accessing credit, government initiatives to one’s needs, and comparing the loan offers before reaching the key decision. Although, for more detailed recommendations, consulting a financial planner may be the best way to go. By organizing finances properly and using a pmay subsidy calculator a dream home is an achievable goal for someone like you.
