Unknown Fact about the Home Loan

Home loans are considered one of the most affordable services in the financial markets, but there are undoubtedly exciting things that one must know if they are or if they will avail a bank home loan soon.

Home loans are loans where banks and other financial institutions provide financial assistance to the borrowers in loans who want to get the house of their dreams. Home loans not only provide financial support but also help in enhancing the dignity of an individual. Having your own home is seen in India as a sense of achievement, and it provides different respect to the societal status and the well being of an individual. That is why the home loan is considered a significant service by the banks and financial institutions as they know the sentimental value of a home attached to a person.

Some of the interesting facts about home loans are -

• Home loans are available at very low Home loan interest rates. If we compare home loans with other loans such as gold loans and personal loans, we will see a vast difference in them. While gold loans and personal loans are much more expensive than a home loan with minimum interest rates going to 8%,9% and sometimes above 10%, a home loan is available at an interest rate of as low as 6.65%. Many lenders offering their services, including TATA Capital home Loan, provide the best in class rates of home loans in the market.

• The highest home loan interest rate ever went up to 18% in 1981 when the country faced an economic crisis. This rate was the highest ever recorded rate of home loan interest. 

• Many people don't know it, but paying extra on your loan can reduce the tenure of the loans. Home loans are to be repaid in the form of EMI, and that is primarily because the total value of the home can not be refunded at once. If done extra at the time of availing, home loan repayment is more likely to reduce its tenure, passing the house ownership quickly to the borrower once the total payments are made.

• Home loan payments can be automated. There are two systems- Fixed rate of interest and floating rate of interest. The borrower can choose any of the above. While in a fixed rate of interest system, the rate of interest remains the same no matter what and in a floating rate of interest system, the rate of interest changes as per the market conditions.

• One of the best things about home loans is that they do not require any down payments to be made. This proves very helpful from the borrower's point of view as they can start using the loan amount without making any significant payment in the introduction. The charges are to be made in the form of EMI later on.

• One of the most talked-about factors while making a home loan or any other loan is the credit score. A credit score measures the reliability of a person before providing any credit, and almost all banks use it to verify before giving any credit to anyone. A credit score of 750 or above is essential before your home loan application gets approved. Not only this, but with the help of a home loan, one can improve their credit score too. By timely and regular payments of home loan EMI, the credit score gets impacted positively.

• Self-employed finds it a little difficult to avail of a home loan. As they get hit by a two-headed sword when they try to show less income to save on Income tax, but at the same time, a steady income is required to avail a home loan. So maintaining a proper balance sometimes becomes a little hectic for self-employed and people in business.

• It is not required to open up a bank account with the lender before providing home loan services. Still, if a borrower does open up a bank account with the lender, the banks offer various additional benefits and discounts.

Conclusion -

Home loans are a significant part of the portfolio of any bank or financial institutions. Home loan demand is all set to rise in the coming years as repairs and renovations are an ordinary expense for a home which is also a service offered in the home loan agreement.

Read More:- Unknown Fact about the Home Loan