Here we have enumerated different features of a home loan to help you understand the home loans in a better way.
- 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. If you are unable to pay the loan for any reason, the lender can legally auction off your property to retrieve the outstanding loan amount.
- Being a secured loan, interest rate of a home loan is comparatively lower than the interest rate of 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 esportbet.today. 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 which range from 5 years to 30 years. The repayment time period for a home loan is fixed at the time you apply for home loan.
- Prepayment of a home loan can also be done. Some home loan providers charge a prepayment fee if you prepay a loan while some do not. Therefore, home buyers should compare the home loans available to find the best home loan offers.
- The Equated Monthly Installment (EMI) is the money you pay each month to repay your home loan principal amount and its interest amount. Thus when calculating the Home Loan EMI, both the accrued interest on the loan and the principal amount are taken into account. You can use the home loan EMI calculator to calculate the EMI which you will have to pay for your home loan.
- Home loan includes processing fees and other charges related to home loan such as registration charges, penalty on prepayment, commitment charges and miscellaneous charges (documentation/consultation).
- Banks usually maintain a margin of at least 20% when sanctioning a home loan. Thus, the home loan amount provided to you only covers a maximum of 80% of the estimated value of the house being purchased. Additional costs such as down payment, registration costs, etc. have to be borne by you.