The ownership of a house is one of the key signs of success among the fast-growing Indian middle class. As the income of the average Indian family increases, there has been a continuous increase in the desire to own a house and this has lead the price of property to reach unmatched highs in recent years. This is true for not just the big cities but also for smaller cities across India. This unbridled price rise has made it near impossible for the common man to purchase their home through just savings. This is among the major reasons for the home loan business to have witnessed unmatched growth in recent years. So much so that prospective home buyers have multiple options to seek a home loan from banks as well as NBFCs.
Features of a home loan
- When granting a home loan, the lender uses your property (home) in order to secure the loan. Due to use of your house as collateral, home loans are secured loans that involve a low level of risk for the lender.
- Being a secured loan, home loan interest rate is comparatively lower than an unsecured loan, such as a personal loan.
- The amount of the home loan can vary based on your income, credit history, the locality/city you are planning the purchase in and various other factors. You can apply for a home loan jointly with your spouse, family members or others as co-applicants.
- Home loans usually have longer repayment tenures and ranges from 5 years to 30 years. The repayment time period for a home loan is fixed at the time you apply for home loan.
- The Equated Monthly Installment (EMI) is the amount that you pay each month to satisfy your home loan amount. When calculating the Home Loan EMI, both the accrued interest on the loan and the principal amount are taken into account. You can use home loan EMI calculator to calculate the EMI which you will have to pay for your home loan.