Buying a house is one of the biggest dreams come true for most people and an extravagant affair altogether. Imparting life to such a dream requires a lot of effort from the buyers’ end and the best one can do to accommodate the home in their budget is through a home loan.

A home loan can be opted to buy a new house/flat or a plot of land where you construct the house, and even for renovation, extension, and repairs to an existing house.

This is the most common type of home loan availed to purchase a house. There are many housing finance companies, public banks, and private banks that offer housing loans where you borrow money to purchase the house of your choice and repay the loan in monthly instalments.

You can get up to 80%-90% of the house’s market price in the form of financing. The lender will hold the house until you completely repay the loan.

This is the right home loan type if you already have a plot of land and you need financing to construct a house in that land. 

Say you already own a house and you would like to extend the house with another room or another floor to accommodate the growing family. Home extension loan provides financing for this purpose.

A home improvement loan provides financing for renovating or repairing the house if there’s any fault in the existing system, such as painting the house’s interior or exterior, plumbing, upgrading the electrical system, waterproofing the ceiling, and more.

The current home loan interest rate may be overwhelming, or you may not be happy with your current lender’s service; you can transfer the home loan’s outstanding balance to a different lender who offers a lower interest rate and better service. Upon transfer, you can even check out the possibilities of a top-up loan on your existing one. 

This type of home loan provides financing for purchasing the plot of land where you would like to construct a house and for the construction, both within a single loan. 

The home loan interest rate is much lower as compared to any other loan types available. If you come across a cash crunch, you may get a top-up on the existing home loan at a lower interest rate than a personal loan to solve the issue.

Unlike any other loans, home loans come with longer repayment tenure, as much as 25-30 years. This is owing to the significant loan amount one will have to borrow to purchase a house.

Spreading the loan amount and interest applicable over a longer tenure will reduce the monthly EMIs reducing the borrower’s burden.

The average home loan interest rates are from 6.5% to 12.00% in India as of March 2021. The rates usually vary from lender to lender, RBI-prescribed repo rate, inflation, economic activities, and many other factors. 

Some banks also give a special privilege to women, bank staff, and senior citizens by providing a 0.05% concession on the home loan interest rate.

Further, a home loan interest rate can either be fixed or floating in nature. A fixed-rate home loan remains the same for a period specified by the bank. This type of home loan is immune to market fluctuations.

In the case of floating-rate home loans, the interest rate applicable varies based on the market fluctuations. It may or may not be beneficial for the borrower.  

Generally, an EMI calculator is a simple and handy tool that calculates the monthly amount payable to the lender (bank) in terms of a loan.

You can try our Home Loan EMI Calculator to find out the EMI you may have to pay every month for a specific loan amount and figure out your affordability well in advance.

The home loan calculator is easy to use as you have only to enter the values of the principal loan amount you are planning to borrow (P), the time duration (N), and the rate of interest (R). 

Availing a home loan has gotten easier than before, thanks to the various mediums that exist now with the advent of technology. One can either go to the bank branch directly, inquire about the home loan options, or go for an online application. 

Upon applying, the bank collects the required documents from you. It initiates the processing of your application, including checking of CIBIL score, the value of the asset, eligibility calculation based on your income and liabilities, and more.

After evaluating and verifying all the documents, the banks decide to approve or reject the loan.