Home Loan is simply referred to as the collective money that is borrowed at a given interest rate and after the fixed time the borrower is obligated to repay the loan. For personal requirements, 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 a shelter, and shelter is the essential commodity for human beings. 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 higher in residential areas. With the ever-growing competition, every individual wishes to buy the best dwelling for himself.
In India, the rates of the houses have been skyrocketing to such an extent that it is nearly impossible for most of the individuals to gather to buy an entire amount in a house without any help from 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 is obligated to pay a sum of money in the initial stage as the down payment which is about the total sum of money is at a rate of 20% in which he desires to borrow. The person needs to give 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 that 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 rate.
The interest rate may be fixed or floating. A fixed- interest rate means that the interest rate 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 interest rate if required.
When we talk about floating interest, the interest is not consistent. The bank can change the interest rate 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 policies. An individual needs 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 individuals must 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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