Housing Loans - Basics you Must Keep in Mind for Suitable Deal

by : Meghna Arora

You have ambitious plans for owning a home or you may be just thinking buying a piece of land to construct a home on it. This of course requires huge funds. In turn this means that you would be requiring housing loans. But before you apply for the loan, ensure that you have gone through all aspects of it so that you sign a suitable deal.

First know that these loans are given for purchasing house of flat, land with house or buying land for constructing house and so on. All those people who have a regular source of income are eligible for these loans.

The loan amount that one is capable of borrowing can go up to Rs 3 crore but depends on lots of factors. Usually lenders are willing to approve 85 percent of the project cost. In this cost stamp duty and registration charges are also included.

Note that you are required to make down payment which will be higher if you are buying an old house then the. However in case you are constructing a new home, the lender will take a lower down payment.

As far as the securities are concerned, lenders will take only the mortgage on housing property and no other collateral is required from the borrower. In case the borrower fails to offer security in time then alternate collateral will be required till time mortgage is given in favor of bank.

Interest rates on are either floating or adjustable. The advantage of fixed rate is that the borrower beforehand knows the monthly payments to be made for throughout the loan period and so one can plan budget. The borrower is saved from any rise in market rate of interest.

Another aspect that you must keep in mind is that you would be insuring house or property and it is mandatory. The cost towards the house insurance has to be borne by the borrower.

Before applying for housing loans, better first take rate quotes of the lenders. You should compare those, keeping rates and terms-conditions in mind. See which lender will approve a loan of your requirement without many additional costs. Keeping these basics in mind you can locate a suitable deal.