WHAT IS A HOME LOAN?

A home loan is an amount of money that an individual borrows from a bank or money lending company at a certain rate of interest to be paid with the EMI every month. The property is taken as a security by the money lending company for the Home Loan. A home mortgage is a loan given by a bank, mortgage company or other financial institution for the purchase of a residence—either a primary residence, a secondary residence, or an investment residence—in contrast to a piece of commercial or industrial property. In a home mortgage, the owner of the property (the borrower) transfers the title to the lender on the condition that the title will be transferred back to the owner once the final loan payment has been made .

• The property can either be commercial or personal.
• When the borrower cannot pay the dues, the lender will possess all the legal rights to recover the outstanding loan amount by the sale of the property in question.

How to Get Home Loan?

To obtain a mortgage, the person seeking the loan must submit an application and information about his or her financial history to a lender, which is done to demonstrate that the borrower is capable of repaying the loan. Sometimes, borrowers look to a mortgage broker for help in choosing a lender. 

The process has several steps. First, borrowers might seek to be pre-qualified. Getting pre-qualified involves supplying a bank or lender with your overall financial picture, including your debt, income, and assets. The lender reviews everything and gives you an estimate of how much you can expect to borrow. Getting preapproved is the next step. You must complete an official mortgage application to be preapproved, and you must supply the lender with all the necessary documentation to perform an extensive check on your financial background and current credit rating.

After you've found a residence you want, the final step in the process is a loan commitment, which is only issued by a bank when it has approved you as the borrower, as well as the home in question—meaning that the property is appraised at or above the sales price. When the borrower and the lender have agreed on the terms of the home mortgage, the lender puts a lien on the home as collateral for the loan. This lien gives the lender the right to take possession of the house if the borrower defaults on the repayments.

Types of Home Loans:

• Home Purchase Loan: This is the loan that one takes for purchasing a home.
• Home Improvement Loan: This loan covers expenditure related to repairs of your home or even renovation.
• Home Construction Loan: This loan comes in handy when you are building a new house.
• Land Purchase Loan: Someone wishing to buy a plot of land for constructing his/her own house can avail of this loan.
• Home Extension Loan: Suppose you plan to add another room, garage, bathroom, or kitchen to your home. This is the loan that you should apply for and this also comes in handy if you are planning to have another floor.
• Joint Home Loan: These are loans taken by two people or even more. For instance, spouses can apply for joint home loans.
• Home Loan Balance Transfer: You can use this mechanism to switch your outstanding loan amount to a different lender with better terms and conditions and lower interest.
• Top-Up Home Loan: This kind of loan helps you borrow some more money above the outstanding loan amount.