If you’re someone in your mid to late twenties then one of the life goals you may have on your radar is buying a home. But in the post-recession economy, it is difficult for someone to think of self-financing their home.
Lucky for us, home loan finance in Pune has never been easier. If you wish to own a home, in the long run, one thing you would definitely need is financing options.
If you are a new home buyer, this is a precise and brief guide on all the intricacies of home loans and how it works in the current scenario.
1. What Is A Home Loan?
If you currently do not have the full amount to self finance your home you can get financial assistance to purchase it.
In this blog, we shall be specifically talking about Home Purchase Loans – which are loans taken to buy a newly built apartment or already constructed property on a piece of land. Almost, every bank or financial institution offers home loans.
There are multiple home finance companies in Pune which can help you get a loan. Each bank has its own policy and loan terms.
2. The Eligibility For A Home Loan
Multiple factors determine a person’s eligibility for a home loan. Some essential requirements to become eligible for a home loan include:
- You need to be between ages 18-60 years old
- You need to be an employed or self-employed individual with a steady income
- You need to be earning more than the threshold amount determined by the bank you are seeking the loan from
Finding a home loan finance company in Pune is just a Google search away. Now. when you do apply for your home loan to the bank there are a few specific factors that most banks will keep in consideration too. They are:
I. 50% Of Monthly Income for EMI
You need to display your fixed income, fixed costs, and prove that 50% of your income can be dedicated to paying the EMI of the bank.
II. Other Loans You May Have
Having a fixed income doesn’t ensure that the bank will give you a loan. Your eligibility to procure a loan will definitely decrease if you have any other outstanding loans or EMI’s to pay off.
III. Your Downpayment Capability
No lender gives out the entire loan amount to an entity. Most banks will give 70-90% of the loan amount and the rest is up to the loanee to procure. When you’re applying for a loan, depending on the bank, you need to prove that you can give up 10-30% of the cost of the house upfront.
3. Things You Should Consider Before Applying For A Home Loan
I. Your Borrowing Capacity
Keep in mind your expenses per month including rent, food, commute, insurance and more. Once you are done the remaining money can go towards the EMI’s that you shall pay to repay your loan.
II. Loan Tenure
Home loans sometimes need to be repaid for years. Anywhere between 20 and 30 years is a good bet. See the loan tenure the bank offers you and see if you can negotiate it. Reduce the total loan amount you take in order to reduce your tenure.
III. Credit Score
For a good home loan rate, you will need to have a credit score of 750 or above. Having a score such as this would make a lender trust you as you are less likely to be a liability for them. This will also help you get an interest rate which is lower than their official claims.
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4. The Documents You Need To Secure A Home Loan
I. Salaried Professionals
Payslips from the employer for the last 3 months and Form 16 or Income Tax Returns (ITR) filing.
II. Self Employed Professionals
Proof of education qualification certificate and proof of your business’ existence. You also need to provide proof of ITR for the previous three years which should also include the computation of income. Lastly, you need to provide a CA audited/certified balance sheet and profit-loss account for the previous three years.
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5. Types of Home Loan Interest Rates
The final thing we will be discussing today is the type of interest rates available in the market. The interest rate and how it is calculated is a very big factor.
I. Fixed Interest Rate Home Loan
Home finance companies in Pune have attractive interest options. You can choose your home loan finance in Pune depending on the interest system you like.
Here the interest rate is fixed for the entire time the home loan is paid back. Thus, even if there are significant changes in the market the interest is not subject to change.
Advantage: Within this system, the interest rate stays the same throughout the payback period. It is helpful for salaried individuals who work on a fixed budget.
Disadvantage: This type of interest rate is generally 1-2.5% higher than other interest rates.
II. Floating Interest Rate Home Loan
This is when the interest rate increases or decreases depending on how well the market is performing.
Advantage: Comparatively cheaper than fixed interest rate as long as the market remains more or less stable. As market rates go up and come down often, these types of loans can help borrowers save money on interest.
Disadvantage: Markets can be fluctuating which, in a bad situation can increase your interest rate significantly.
6. Zen Estate and It’s Tie-Ups
Zen Estate Kharadi currently has tie-ups with 4 institutions that can help you finance your home- Bajaj, ICICI Bank, State Bank of India, and HDFC Bank.
Each of these is a reliable home loan finance company in Pune and has a different loan scheme- all of which you can take a look and get guidance for, from our customer executives when you are on-site.
Our executives will get also get in touch with the financial executives who will guide you through the entire process of receiving financial assistance.
And that is it. This is everything you need to know if you plan on receiving financial help when buying your own home. Make sure to be responsible, accrue savings, and look at the full picture before signing off on a loan.
