Do you wish to buy house in Mumbai? You are not alone; most people dream of buying their own homes in the Financial and Entertainment Capital of the country. However, you should be aware of the various kinds of home loans that are available, before you venture into the investment. Taking a home loan to buy property is always a good idea, since it helps you build an asset for the future, without depleting your hard-earned savings in one go. On that note, here is a guide to the home loan types that you should know about.
These are specific loan offerings that are tailored to meet your needs in various circumstances. You should also be aware of the eligibility criteria, documentation, and application procedures before applying. A little homework is always recommended before going for home loans. On that note, here is the lowdown on these loan types for your benefit.
Regular Home Loan–
This is the commonest type of home loan to buy house in Mumbai. These are home loans offered by banks and NBFCs (non-banking financial institutions) to both salaried and self-employed borrowers in the country. These loans are sanctioned on the basis of your down payment, credit score, repayment abilities and other eligibility criteria.
Most banks offer loans up to 70-80% of the value of your chosen property. You will have to pay the remainder from your pocket. At the same time, you will be repaying these loans through EMIs for a specific tenure. The rate of interest, tenure, and loan approval depend on your income, the maximum amount that you are eligible for, your financial condition and nature of employment, existing debts, and credit score and debt repayment history. You should be mindful of the LTV (loan-to-value) ratio. This is the ratio of your loans to your existing income. It should not be more than 50%. Hence, the bank can sanction up to 50% of your net income as the loan in terms of the repayment ability. Hence, clearing off other debts will be the best way to enhance this figure.
Loan Against Property-
These are also helpful loans if you wish to buy house in Mumbai. Suppose you are finding it hard to get approval for a home loan under the conventional system. In this case, if you have sufficient income and wish to apply for a comparatively smaller amount to invest in another property, then you can apply for a loan against property. The lender will sanction up to 40-50% of the value of your existing property and you can use these funds to invest in buying a new home. These loans require comparatively lower time and paperwork, although the lender carries out the valuation of your property before sanctioning the loan. The rates of interest may also be slightly more competitive.
Plot Loan-
These are loans with smaller tenures and are given for buying plots of land on which you will start construction of your home in the future. The eligibility criteria and application procedure are quite similar to regular home loans. Some banks have guidelines pertaining to beginning construction on the residential plot within a stipulated duration as well.
Home Construction Loan-
These are loans for building homes on plots that are already under the ownership of borrowers. They are slightly different from regular home loans in terms of their application procedure and documentation.
These are the four major types of home loans that you can avail to buy house in Mumbai. Remember to do your due diligence before embarking on the home loan application process. Also choose properties from reputed platforms like Blox in order to avoid future hassles.