All about Home Loans
In a simple terms, the loan can be referred to a sum of money that is borrowed at a given interest rate and after the stipulated time it has to be repaid.For personal purposes, loans can be taken and several amenities are purchased. The loan which we take for buying a house is called a home loan.
Home refers to shelter, and the basic necessity of any human being is shelter. Without a home, no man can carry on his life . To own a house is a great achievement in a place like India. The rates for properties are high specially in residential areas. Also with the growing competition every individual wishes to buy the best dwelling for himself.
In India, the rates of the houses have increased to such an extent that it is near impossible for most of the individuals to gather to buy an entire amount in a house without any help of outer sources. Here a significant role can be paid by home loans. From any financial organization or any bank a home loan can be taken.
The individual has to pay a sum of money in initial stage as the down payment which is about the total sum of money is at rate of 20% in which he desires to borrow. The person has to give a security in some cases against the loan that is given to him. Before granting the loan the bank carries out various policies for the loan to be granted which help in deciding the eligibility. 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, they prove to be a boon for the borrower in fulfilling his dreams of having the best dwelling for himself and his family.
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