A new home brings with it new hopes, joys and emotions and therefore ‘a home of my own’ is a dream of most of us. However, as it is precious so it is costly. At time, a person may not be able to buy a home through his own salary and savings. Here comes the professional lenders, usually, banks who over such people a loan depending upon the profile of the borrower to purchase house.
Home loan is a category of loan offered by lenders, usually bakns and housing finance companies, to borrowers who either want to purchase or construct a house. A common feature of home loan is that the loan is secured against the asset created through this loan, the home. Home loan lenders charge certain interest on the amount of loan offered, and the principal and the interest can be repaid by the borrower/home owner in installments spread over certain years.

Purpose of home loan
• Purchase of
o Flat, row house, bungalow from developers
o Existing freehold properties
o Properties in an existing or proposed co-operative housing society or apartment owner's association
• Self Construction
Key features of Home Loan
• Maximum loan
It varies according to the profile of the borrower but usually falls in between 80%-125% of the cost of the property (including the cost of the land) and based on the repayment capacity of the customer. In terms of amount it remains in between £7,500 to £75,000.
• Rate of interest also varies according to the risk associated with borrowers.
• Maximum Term: Again varies according to the borrowers’ profile but usually remains in-between 5-25 years subject to retirement age.
• Applicant and Co- Applicant to the loan: Home Loans can be applied for either individually or jointly. Proposed owners of the property will have to be co-applicants. However, the co-applicants need not be coowners.
• Adjustable Rate Home Loan: Few lenders offer this facility in which Loan under Adjustable Rate is linked to Lender’s Retail Prime Lending Rate (RPLR). The rate on your loan will be revised every three months from the date of first disbursement, if there is a change in RPLR, the interest rate on your loan may change. However, the EMI on the home loan disbursed will not change*. If the interest rate increases, the interest component in an EMI will increase and the principal component will reduce resulting in an extension of term of the loan, and vice versa when the interest rate decreases.

Processing Charge
This fee depends upon bank to bank and borrower to borrower. Most common charge is 1% of the loan amount applied plus applicable service taxes and cess. But at time, lenders waive off such charges in specific situations such as:

• Part or Full Prepayment of loan under Adjustable Rate (except in case of prepayment through a refinance from other bank or institutions prepayment charges will be applicable)

• Fixed Rate - Part prepayment upto 25% of opening loan outstanding in a financial year

• Replacement of cheques

• Accelerated Repayment Option

Eligibility for availing home loan

The eligibility criteria are: •

• The applicant should be adult. In case of maximum age, lenders have individual term, which most commonly is 65 years at the time of loan maturity.

• The applicant should have a regular source of income.

Documentation

The documents required are:
• Passport size photograph of all the applicants
• Residence and age verification.
• Bank statements
• Latest salary slip/statement showing all deductions in case of employed applicants
• Certified copies of Balance Sheets and Profit and Loss accounts, for self-employed borrowers.

Home, sweet home, built out of your dreams. And, if you can make your dreams true by your own income, it’s great but if you cannot afford through your individual income, there are lenders who realize your long cherished dream of owning your home through hassle free and customer friendly home loans.

Steve Clark can tell you how to look better, live better and breathe better by giving you tips to improve your finances. He writes on loans. His ideas can help you rejuvenate your money. To find Personal loan UK, secured loans, unsecured loans visit http://www.ezpersonalloansuk.co.uk

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