What is a Home Loan?
A home loan is money borrowed from a bank or financial institution to buy, build, or renovate a house. It is a long-term loan that you repay in monthly installments over several years. The loan can be used to purchase a new home, an under-construction property, or even to renovate your existing house. The amount you can borrow depends on your income, credit score, and the value of the property.
Home Loan Interest Rate
The interest rate on a home loan is the cost of borrowing money from the lender. It can be fixed (stays the same throughout the loan) or floating (changes with market conditions). The rate depends on factors like your credit score, income, loan amount, and the lender’s policies. Lower interest rates mean lower monthly payments, so it’s important to compare rates from different banks and lenders to get the best deal.
Features and Benefits of a Home Loan
Flexible Usage: Funds can be used to buy a new home, build a house, or renovate your existing property.
Loan Amount: You can borrow a large amount based on your income, property value, and repayment capacity.
Collateral: The property you buy acts as collateral for the loan.
Repayment Tenure: You can choose a repayment period ranging from 10 to 30 years, depending on your financial situation.
Tax Benefits: You can save on taxes with deductions on both the principal and interest paid on the loan.
Quick Approval: Many lenders offer fast processing and approval for home loans.
Home Loan Eligibility
While eligibility criteria may vary across lending institutions and loan schemes, here are the general requirements for a BigMudra home loans:
Nationality: Indian Residents, Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs)
Credit Score: Preferably 750 and above
Minimum Age: Minimum 18 years (some lenders require 21 years); Maximum 70 years at loan maturity (up to 75 years with select lenders)
Maximum Age: Usually 70 years at the time of loan maturity with some lenders extending the tenure till 75 years of age
Work Experience: Salaried - At least 2 years; Self-employed - Minimum 3 years of business continuity
Business Continuity: At least 3 years (for self-employed)
Minimum Salary: Starting from Rs. 25,000 per month (varies by location and lender)
Loan Amount: Up to 90% of property value
Documents Required
To ensure a smooth application process and for instant loan approval, please keep the following documents ready:
Identity Proof: PAN Card, Passport, Aadhaar Card, Voter's ID, or Driving License
Age Proof: Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook, or Driving License
Address Proof: Bank Passbook, Voter's ID, Ration Card, Passport, or Utility Bills
Income Proof for Salaried: Form 16, Latest Payslips, IT returns (3 years), Investment Proofs
Income Proof for Self Employed: Business License, Business Address Proof, ITR (3 years), Balance Sheet, Profit & Loss Account Statement
Property Documents: NOC from Society/Builder, Construction Cost Estimate, Registered Sale Deed, Allotment Letter, Approved Building Plan
How to Calculate EMI for a Home Loan
To calculate your home loan EMI (Equated Monthly Installment), use the formula:
EMI = [P x R x (1+R)^N]/[(1+R) −1]- P = Principal loan amount
- R = Monthly interest rate (annual rate divided by 12)
- N = Loan tenure in months
Calculating EMI manually can be complicated and time-consuming. Instead, you can use an online EMI calculator. Just enter the loan amount, interest rate, and tenure, and the calculator will instantly show your monthly EMI, total interest, and repayment schedule. This helps you plan your finances and choose the best home loan option for your needs.
Using tools like an EMI calculator makes it easy to compare different loan offers and pick the one that fits your budget.
How to Apply For Home Loan
Applying for a BigMudra home loan is simple and convenient:
Provide personal information and loan requirements.
Compare eligible home loan offers based on interest rates, processing fees, and loan amounts.
Choose the offer that best suits your needs and apply online.
While applying for a home loan you can calculate your monthly EMI through our Home Loan Calculator.
Fees & Charges
| Particulars | Charges |
|---|---|
| Processing Fee | 1% – 2% of loan amount |
| Foreclosure/Prepayment Charges | For floating rate: Nil | For fixed rate: Around 2% – 4% on the principal outstanding |
| Overdue Charges on EMI | 2% per month of the unpaid EMI |
| EMI Bounce Charges | Around Rs 400 |
| Legal Fees | As per actuals |
FAQs
What is a Home Loan?
A home loan is a financial product that allows you to borrow money to purchase, construct, or renovate a residential property.
How to avail a home loan?
To avail a home loan, submit an application with required documents, undergo credit assessment, and if approved, complete property verification before loan disbursal.
What is the interest rate on a home loan?
Home loan interest rates typically range from 6.5% to 9.5% per annum, varying based on factors like credit score, loan amount, and tenure.
Who is eligible for a home loan?
Indian citizens or NRIs aged 18-70 with a stable income and good credit score are generally eligible for home loans.
How much home loan can I get on a 40,000 salary?
With a salary of Rs. 40,000, you may be eligible for a home loan of approximately Rs. 20-25 lakhs, depending on other factors like existing debts and credit score.
What are the property documents required for home loan?
Key documents include property ownership proof, NOC from builder/society, approved building plan, and property valuation report.
Which bank is best for home loans?
The best bank depends on your specific needs. Compare offers from multiple lenders, including Bigmudra, to find the most suitable option.
Can I get a home loan for the entire property value?
Most lenders offer up to 80-90% of the property value as a loan, requiring you to pay the remaining as down payment.
What is the maximum home loan that I can get?
The maximum loan amount depends on your income, credit score, and the property value. Some lenders offer loans up to Rs. 10 crore or more.
How do lenders check the EMI affordability for their home loan applicants?
Lenders typically use the 50:30:20 rule, where your EMI should not exceed 50% of your monthly income.
What home loan can I get with a poor credit score?
With a poor credit score, you may face higher home loan interest rates or lower loan amounts. Consider improving your score before applying or exploring government-backed loan schemes.
