Types of Home Loans

• Fixed Rate Loan - Loan is given at a fixed rate of interest that remains same throught the tenure.

• Adjustable Rate Mortgage - In this rate is fixed for some years and change periodically on the basis of prime rate.

• FHA Loan - In this loan, down payment is less and the loan amount is limited maximum upto 35 Lakhs. Interest rate is fixed. Buyer pays additional mortgage insurance.

• VA Loans - These are specifically provided to veterans or active-duty military personnnel with no down payment.

• USDA Loans - These are provided in rural areas with no down payments.

• Interest only - In this borrower pays only the interest amount durig the starting of tenure say during starging 5-7 years. After this period, starts to pay the principal and interest both.

• Balloon Mortgage - This is a fixed interest mortgage loan, in which some amount is to be paid in EMIs in starting duration of loan. After than all balance amount to be paid as a lump sum amount.

Eligibility Criteria

It may depend upon the lender, but some common criterias are mentioned below 

• Age - Borrow must be atleast 18 years of age.

• Income - Amount of loan you can borrow highly depends on your net income.

• Credit Score - Higher the credit score higer the chances of approval.

• Employment History - Stable employement hisotry increases the chances of loan approvals.

• Debt-income Ratio - It is a ratio between the Debt on the borrow and the income of the borrower. Higher the ratio less chances of loan approval.

• Citizenship - You should be citizen or permanent resident of the country in which you are applying for the loan.

• Repayment Capacity

Documents Required:

• Identification proof like Passport/ Driving License/Any Other Government-issued document.

• Age Proof like Birth Certificate/Passport/ Any Other Government-issued document.

• Address Proof like Utility Bills/Rent Agreement/Any Other Government-issued document.

• PAN Card

• Income proof like Income Tax Return/Bank Statements/Slary Slips.

• Property Documents like NOC from Builder, detailed estimate of house, registered sales deed, allotment letter, approved building plan etc.

• Loan Application Form

Benefits of Home Loan

• Lower Interest Rate - Home Loan is the cheapest loan in comparison to the all other loans.

• Property Inspection - Before sanction of a loan, bank go through all the checks about the legal ownership of the property. So, its likely that you get the legal property not scammed.

• Big Loan Amount - Bank can fincance upto 90% of property value.

• Long Tenure - It usually have long payback period say 10-20 years.

• Tax Benefits - You get the tax deduction on the interest (upto INR 2 lakhs u/s 24B) as well as principal repayments (upto INR 1.5 lakh u/s 80C)

• No Prepayment Penalty - IF you want to payoff all the loan before the loan tenure, you can do wihout bothering about any prepayment penalties.

• Transferable - IF you are not satisfied with your current lender due to any reason like higher interest rate, bad services, many other charges etc, you are free to transfer your loan to any other lender.

Disadvantages of Personal Loan

• High Interest Rates.

• Limited Loan Amount.

• High Processing Fee and other charges.

• Failure to repay can effect your credit score badly.