Home Loans In India
Not very long back, for the average middle class Indian having one’s home was an issue which was a source of great mental stress because one had to spend one’s entire lifetime saving for this ultimate dream without which there is no security or stability in life. But today all this has changed because of the ease with which one can get a variety of home loans from innumerable banks and financial institutions that have entered the arena. In fact, these home loans have an amazing variety such as home equity loans, home improvement loans, interest only home loans, mobile home loans, bad credit home loans, secured home loans, new home loans, simple home loans and construction home loans etc.
Today it is possible to actually move into one’s home as soon as one can cough up the down payment and of course keep paying the installments. But one has to beware of the fact that the home loan is actually a mortgage and in case you default on your payments, you could loose your home.
The interest rates vary and the term of the home loans range from one to thirty years and obviously the longer the term, the higher will be the interest charged. There is also the rule that is one has decided on the longer term and them decides on pre payment, then there is a pre payment penalty which ranges from one to two percent.Applicants for the loans are screened by the banks or the concerned financial institutions to determine if they are credit worthy and one will have to produce some proof of income before the bank so that they can decide if one is financially sound and has the resources to regularly come up with the EMI or the monthly installments which are a certain percentage of one’s income.
These rates of interest can be categorized as fixed or floating and range from 7.5% to 10% depending on the bank.Some of the leading home loan companies are IDBI, HDFC Bank, Housing and Urban Development Corporation Ltd., Housing Development Finance Corporation Ltd.,LIC Housing Finance Ltd., Kotak Mahindra, ICICI Bank, Can Fin Homes Ltd, Citibank and UTI Bank.GE Home loan is the new player in the market offering a loan for 200,000 though it only offers floating rate loans in the 7.5 to the 8.5% range.
One of the reasons that home loans are readily being offered by such a wide variety of sources is also the fact so many more people in India can afford to take loans due to their soaring pay packets in this booming economy.But this upbeat mood in the home loan arena also obscures the fact that buying a house is still a very expensive proposition and interest rates are far too high though they have fallen in the recent past in the wake of pressure from the
Reserve Bank of India.
Though banks are still insignificant players in the market, home loans are a lucrative business for them since they get such a substantial return on these investments.According to a 2001 McKinsey study, land prices in India were the highest among all Asian nations relative to average income and the HDFC Chairman issued warned about the danger of inflationary conditions in housing created by a huge demand and the difficulty in land supply. Still, the home loan sector is on a upswing and there is an increase in the average loan size of home finance companies. HDFC is the second largest player in the home finance business and has seen average loan increase of almost 25 per cent and ICICI Bank, which is the largest player in the business there has been an increase of 10-15 per cent over last year.
Home improvement loans Loans.Home equity loans Mobile home loans