They say home is where the heart is. There is truly is nothing more comforting than coming back to a special place that melts your worries away. However, owning a house doesn’t come easy. With a home loan, you can build an abode for your loved ones. Whether you wish to acquire a new property, construct a new home or rebuild an old one, you can find home loans for your needs.
While there are a ton of options for you to choose from, it always pays to do your due diligence. Owning a home in urban cities can be quite different from owning a property in rural areas. The area’s population, availability of amenities, employment opportunities, the pace of development as well as the standard of living are all influencing factors when applying for a home loan.
Take a look at our curated guide to make an informed decision and secure a bright future for you and your family.
1. Rate of interest
The first and foremost step in applying for a home loan is to check the rate of interest that a company has to offer. Urban home loans usually have a higher rate of interest owing to the city’s high standard of living. However, the upside is the ability to take a larger loan from large, private banks that provide 75-85% of the cost of the property. Rural loans, on the other hand, are handled by Rural Regional Banks (RRBs). Special provisions are made by Small House Banks (SHBs) to make rural housing loans easy and manageable. They offer a concession in interest rates to promote the development and cater to the needs of the rural community members. With Tata Capital’s affordable home loan interest rates, you can create a personalised plan that is tailored to your convenience for a satisfying experience.
2. Fees and charges
When taking a loan, financial institutions charge a basic processing fee upon application. In urban areas, the processing fee can be a fixed amount or they charge a percentage of the loan amount. You may also have to pay an administration fee upfront once the loan is sanctioned. The average processing fees fluctuate from 0.5 to 2%. However, in rural areas, many loan products come with a very minimal to no processing fee to encourage better housing and living standards. However, there are certain extra costs like interest tax and commitment fees that may be applicable in both places. Other miscellaneous costs like consultation fees may also be charged by some banks. However, many institutions offer door-to-door servicing in rural areas, free of cost.
3. Eligibility checks and documentation
Once the wheels are set into motion, your application will be under review. To ensure approval, submission of proper documents is very important. Your income, qualification, age, identity proof, the stability of occupation and bank statements are the details required in the documentation process. If self-employed, submit a copy of audited financial statements of the past 2 years. People on a salary need to show their latest paycheck, TDS certificate and a letter from their employer for proof. You will need to put up collateral and show all your assets and liabilities. Rural home loans require the applicant to submit proof of income and identity. Agriculturalists need to submit copies of title land documents and verification of crops being cultivated on land for proof of land holding and income.
4. Loan tenure
While the repayment period differs for every financial company, urban cities have a standard loan tenure ranging from 5-20 years. Few institutions offer a longer tenure at a higher interest rate. If you wish to pay your loan ahead of schedule, there is a pre-payment fee varying from 1-2%. Your residential status can also affect your loan tenure. Residents are offered higher tenure as opposed to NRI’s who are granted a maximum tenure of 7 years. Rural housing loans offer borrowers a flexible tenure option, ranging from 3-20 years based on their repayment capacity. However, there is no penalty for prepayment of the loan in rural areas.
Your dream home is never far away with trusted companies like Tata Capital that offer multiple EMI payment options for a smooth process. Use the home loan EMI calculator to find the right loan and build the house of your dreams!