For decades, owning a home has been a symbol of success and a significant life milestone. However, choosing the correct home loan is just as crucial as choosing the perfect home itself. A well-suited home loan can make your repayment journey smooth and stress-free, while an ill-fitted one can lead to financial insecurity and potential obstacles for future loans.
The big question that is on the minds of many: Can I get a 90% home loan?
In this article, we will delve into the factors that affect your home loan eligibility and the Reserve Bank of India's guidelines for loan percentages. Therefore, let us begin by understanding the critical factors that go into finding the perfect home loan for your dream house.
Home Loan Approval Criteria: Choosing the Correct Home Loan
Choosing the right home loan is akin to finding the perfect key to unlock the door to your dream home. It is a decision that can significantly impact your financial well-being, both in the short and long term. Here are five key factors you must consider when selecting a home loan.
Compare Interest Rates
Interest rates on home loans can vary from one bank to another, and even within different loan products offered by the same bank. Your specific interest rate will depend on factors like your repayment capability, credit score, and the loan amount you seek. Therefore, it's crucial to compare and assess interest rates from various lenders.
TATA Capital, for instance, offers attractive interest rates on its home loans, making your dream home more affordable and easier on your pocket.
Pick an Optimal Loan Tenure
The tenure of your home loan plays a significant role in determining your Equated Monthly Instalments (EMIs). Opting for a longer tenure can lower your monthly EMI but might lead to a higher overall interest payout. On the other hand, a shorter tenure means higher EMIs but can save you money in the long run. Consider your financial capabilities and long-term goals when selecting the loan tenure that suits you best.
Verify Processing Charges
Banks typically charge processing fees to cover the costs associated with assessing your loan application, property valuation, and verifying the information provided by you. Keep in mind that these charges can vary between banks, so it's essential to be aware of the fee structure to avoid any unwelcome surprises.
Go through the Foreclosure Norms
Foreclosure refers to closing your home loan ahead of the stipulated tenure. Some banks may charge additional fees for early closure. However, with banks such as IndusInd Bank, you can pay off your loan at any time without incurring extra charges. Understanding the foreclosure norms is crucial, especially if you have plans to pay off your loan before the scheduled tenure.
Look at Non-Financial Aspects
Your interaction with the lender will be an integral part of your home loan journey. It's essential that the lender offers excellent post-disbursal service and is responsive to your needs. A lender who is easily accessible and provides a stress-free experience is a valuable partner on your path to homeownership.
Understanding High Loan to Value Mortgages Components
It's essential to understand the key components that make up a home loan. Two fundamental elements are involved in this process: the loan percentage and the down payment.
Loan Percentage
The loan percentage is the portion of the property value that a bank is willing to lend you as a home loan. In simple terms, it's the amount you can borrow from the bank to finance the purchase of your home. However, it's important to note that banks are typically not allowed to finance the entire property value.
Down Payment
The remaining portion of the property value that you must pay upfront from your pocket is known as the down payment. This is a crucial financial commitment that every homebuyer must consider. The down payment forms a significant part of your initial investment in the property.
It's important to understand that banks are not permitted to provide loans for the full property value, which means you cannot avail a 100% loan. However, you may wonder if it's possible to get a 90% home loan, and the answer is yes, but under specific circumstances.
RBI Guidelines for Loan Percentage
According to the guidelines issued by the Reserve Bank of India (RBI), the loan percentage that banks can offer varies based on the loan amount and property value. Here's a breakdown:
For Property Value Less than Rs. 30 Lakhs
If the property value falls below Rs. 30 lakhs, you can avail a home loan of up to 90% of the property value. This means you'll need to make a down payment of 10%.
For Property Value Between Rs. 30 Lakhs and Rs. 75 Lakhs
For properties with values ranging from Rs. 30 lakhs to Rs. 75 lakhs, you can secure a home loan of up to 80% of the property value. In this case, you'll need to provide a down payment of 20%.
For Property Value Above Rs. 75 Lakhs
For properties valued at more than Rs. 75 lakhs, you'll need to pay a larger down payment. In this scenario, you can avail a home loan of up to 75% of the total property value, and the down payment required will be 25%.
Conclusion
The rise in property prices across India's major cities underscores the importance of selecting the right home loan. It's more than just a financial transaction; it's a significant step towards achieving your dreams. Your choice of home loan can impact your financial well-being not just in the short term, but for the years to come.
TATA Capital understands the significance of this decision, and we are here to support you on your path to homeownership. We offer attractive interest rates, flexible loan tenures, a hassle-free application process, and responsive customer service. Whether you are a first-time homebuyer or looking to transfer your outstanding housing loan, we can assist you with minimal paperwork.
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08 February 2024
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