Introduction
Yaar, in this blog you are going to get all the information related to home loans from A to Z. I guarantee you that after watching this, you will not need to search for any other blog or article related to home loans. And yes, there is a great surprise waiting for you at the end.
What is the Meaning of a Home Loan?
In simple words, a home loan means the loan that you take to buy a residential property. The word “residential” is very important here.
- If you take a loan to buy a commercial property, it will not be considered a home loan.
- There are three common residential loan cases:
- Buying a house in an apartment
- Buying a ready-made house
- Buying land and building a house on it
All three come under the category of home loans, but with minor differences.
👉 The first two categories (apartment or ready-made house) are called home loans.
👉 The third category (land + construction) is called a construction loan.
In construction loans, banks do not disburse the full amount at once. The bank provides the loan amount in installments as construction advances.
The Process of Taking a Home Loan
The first doubt many people have is whether a home loan is available only for a house/plot or also for construction. The answer: both are possible.
Step-by-Step Process
- Pick a home as per your budget and approach the bank for financing.
- The bank informs you that if your house value is ₹1 crore, you may get 80–85% as a loan (depending on your credit score and income).
- The bank issues a sanction letter.
- With this letter, you can finalize your property and pay a token amount.
- The bank hires an external agency to do property valuation.
- After a week or two, you pay earnest money/advance, usually 20–25% of the property’s value.
- An agreement to sell is prepared on a ₹4000 stamp paper.
- After 2–3 weeks, the registration date is announced. You will need to clear the outstanding amount at this step.
- The bank does its due diligence: title search, legal checks, and valuation.
- On registration day, a bank representative provides a cheque, and the sale deed is given to the bank (mortgaged until loan repayment).
Loan Eligibility Factors
Banks usually provide 80–85% of the property value, but this depends on three main factors:
| Factor | Details |
|---|---|
| Annual Income | You can get up to 5× your annual income. Example: ₹10 lakh income → ₹50 lakh loan. |
| Credit Score | Minimum 750 required. Above 800 gets best offers. |
| Loan Amount Slabs | Up to ₹30 lakh → 90% loan; ₹30–75 lakh → 80% loan. |
Rate of Interest
There are two types of interest rates:
- Fixed Rate → Interest remains constant for a fixed time.
- Floating Rate → Varies with RBI’s repo rate changes.
👉 90% of the time, floating rates are recommended since repo rates may reduce, lowering interest rates.
Additional Bank Charges
Banks often add extra charges, but most are negotiable:
| Charge | Notes |
|---|---|
| Processing Fee | Negotiable, can be reduced to zero |
| Legal Due Diligence | Often added by banks, but negotiable |
| Term Insurance | Bank will push for this; if you already have term insurance, it can be used |
Single vs. Joint Loan
- Single Loan: Loan taken by one person based on property registration.
- Joint Loan: Taken with spouse or co-applicant.
Benefits of Joint Loan
- 1–2% benefit on property registration charges
- Extra tax benefits:
- ₹1.5 lakh on principal (Sec 80C)
- ₹2 lakh on interest (Sec 24B)
- Together, a couple can save up to ₹7 lakh annually
Best Banks for Home Loans
Finding the best bank is tricky as online sites (Bank Bazaar, Paisa Bazaar) often give random results. The best way is to learn from real borrowers’ experiences.
- If you are a government employee → PNB offers 8.15% interest.
- If you are a private employee → Kotak and HDFC are good options.
Surprise for You 🎁
As promised, here’s the surprise:
👉 A Free Masterclass on Home Loans is being hosted for you, where experts will answer all your doubts one-on-one.
✅ To join, fill out the form linked in the description.
✅ Only join if you are serious about taking a home loan or reducing your existing loan rate.
Conclusion
From understanding the meaning of home loans to the process, eligibility, interest rates, charges, and the best banks — this blog covered everything in detail. Don’t forget to join the Free Home Loan Masterclass to clear all your remaining doubts!
