The RBI decided to keep the current repo rate unchanged at 4% to maintain its accommodative stance. Such monetary reforms have pushed the housing loan interest rate to its lowest in 15 years.
Unsurprisingly, many home buyers are now inclined toward home loans to make the most of the situation. The scenario has prompted an increase of around 25%–40% in home loan applications.
The answer to the question ‘which is the best home loan?’ is often subjective. Therefore, prospective borrowers must look for a home loan that is best suited to meet their specific financing requirements. Usually, the general features and associated benefits of a loan option define which offer can be a suitable choice. Therefore, individuals should be extra cautious when comparing different housing credit options and their offerings.
Salient features of the ideal home loan
The best housing loans feature the below benefits.
- A high-value loan quantum
Several renowned financial institutions offer a high quantum of loan to eligible applicants. The sanctioned loan amount is adequate to fund requirements such as purchasing, constructing, or renovating a residential property. However, it is important to note that the loan quantum often depends on an applicant’s repayment capability, loan tenor, and property value.
- Competitive rates and transparent charges
The interest rate is a crucial component when it comes to determining one’s loan affordability. It is normal for individuals to lean toward loans available at a low interest rate. While some financial institutions offer loans at a lower rate, they make up for it by charging inflated fees.
On the other hand, reputed HFCs offer home loans at a competitive rate of interest and are transparent about levying charges. This helps prospective borrowers gain an insight into the overall cost of borrowing and plan repayment accordingly.
- Flexible repayment tenor
Leading HFCs offer a flexible repayment tenor to housing loan borrowers, which can typically extend up to 20 years. Individuals should select a tenor best suited to their financial plans. You can use a home loan EMI calculator to determine the ideal combination of loan EMI and tenor. Bear in mind that the choice of tenor impacts EMI considerably. For instance, if an individual opts for a home loan for 15 years, he/she is more likely to be charged a higher rate of interest than another individual who opts for a tenor of 11 years. You also want to remember that other factors influence interest rate determination as well.
- Simple loan eligibility criteria
The best financial institutions lay down simple housing loan eligibility criteria to allow more individuals to opt for the required financial aid. Meeting loan eligibility criteria can not only help borrowers increase their chances of loan approval but also secure the best repayment terms.
Generally, lending institutions require applicants to meet the following criteria to qualify for a loan:
- Must be a resident Indian citizen
- Must be between 23 years and 62 years of age in the case of salaried applicants
- Must be between 25 years and 70 years of age in the case of self-employed applicants
- Must have a CIBIL score of at least 750
- Must meet the minimum monthly income specified by the HFC
Such HFCs also generally allow individuals to calculate home loan eligibility online to estimate the quantum of the loan amount they are likely to receive.
- Hassle-free application and documentation
Top HFCs follow a quick housing loan procedure to facilitate a hassle-free borrowing experience. In line with this, they allow individuals to apply for a home loan and manage their account online.
Another factor that HFCs have simplified is verification. Most lenders ask applicants to submit only a few essential documents to keep the process hassle-free. Applicants usually have to submit the following common papers:
- Proof of identity, including PAN and Voter ID
- Proof of address, including utility bills and Aadhaar card
- Income proof, including salary slip, Form 16, and bank statement
Note that individuals may be asked to submit additional documents to complete the home loan verification process. Also, the required set of documents for salaried and self-employed borrowers may vary.
Usually, leading HFCs also provide pre-approved offers to simplify processes such as documentation and approval. These offers are available on several financial products, including loans against property and home loans. You can check your pre-approved offer now by entering your name and contact information.
- Availability of balance transfer and top-up facility
While looking for the best home loan options in the market, individuals should look for lenders who offer housing loan transfer and top-up facilities. Essentially, a home loan balance transfer helps to save money while a top-up loan allows borrowers to access additional funds without going through the hassle of documentation. These features are crucial to maximising a home loan’s benefits.
The top housing loan options also offer borrowers prepayment and foreclosure facilities without additional charges. Such facilities allow borrowers to make the most of their excess funds and lower the loan burden as per convenience.