Some important terms to know while applying for home loan.
Food, shelter, and clothing are the basic needs of every individual. Of these, home is one of the prime needs as without shelter you want to able to live on earth. But home prices are getting skyrocketing high and home loan India are the perfect platform to turn your dream of owning a house into reality. Housing Loans are offered to individuals who wish to purchase a new or resale home, construct, renovate, get a home extension done, etc. Bank or financial institutes hold the title or deed of the property until the time loan amount has been paid back with along with the interest rates due to it.
However, it’s a vast topic and often customers are confused with some of the terminology associated with it. Therefore, it’s better to visit the lender website to get an overview of home loan and the terminology associated with it.
A few are explained to you:
Disbursement
It’s the money that the lenders give to the borrower after deduction of the processing fee, and other imperative charges. Usually, lender disburses the loan amount once all the submitted documents are verified and down payments are being paid. They may either disburse partial or full amount to the seller in on go. In partial its done stage wise as the slab is constructed and work gets in a swing by the lenders. Usually, people who buy under construction property, lender disburse money as a partial disbursement.
Interest Rate
Well, that's the entire crux of your home loan product. Obvious, when lenders offer a loan they will charge a certain interest on it. With more and more emphasis on offering better loan facilities to Indians the interest rates have dipped around 8.50 to 9.50% on the home loans. Based on the calculation and applicable rates there will be a certain amount need to be payable to the lending institutes in the form of EMI. Its every month till the loan is paid back in full term. EMI consists of principal and interest rates. You can opt for fixed interest rates, floating rates or semi fixed-floating interest rates.
Offer letter
Once the loan is sanctioned, you will get offer letter stating the details like loan amount, interest rates, type of interest, tenure, EMI, and other conditions of the loan.
Eligibility criteria
It depends on various factors like income source, risk appetite, age, number of dependents, property value, credit score, etc. The lender will consider all these factors along with your credit history to determine how much money you are eligible for.
LTV (Loan to Value Ratio)
It is loan amount being divided by agreement value of the property. If the value of the property is 30, 00, 000 lenders will give you a loan of around 21 lakhs.