Home loans are a pretty simple form of concept to understand. In a home loan, a person in need of a home goes to a bank or a financial institution and asks for financial assistance. The said bank or financial institution provides financial aid to that person in the form of a loan. The borrower who wants a house gets their work done with the help of the money received from such banks. This purpose of taking a home loan can be any- purchasing a house, constructing a house, repairing the house, an extension of a house, or renovation. The said house is kept as security with the bank, and banks have all the rights to sell that house if the borrower does not make the payment on time.
The concept is simple as well as the process. India has a huge population so Naturally, more and more houses would be in demand. Most of the Indian population consists of middle-class people with a limited income and large families to sustain. It is generally not possible for them to get their house on their own. They will require assistance from any outside source. Here comes the role of banks and other financial institutions. They provide the loans and charge a specific interest rate.
Some of the features of a home loan that will help us understand it in a better way are:-
Home loans are made quite affordable so that even the lowest of the middle class can afford them. Home loan keeps that concern in mind and charges EMI, which is to be paid monthly. One example of such a lender is Dena Bank which is famous for its Dena Bank Home Loan. They claim to provide the best interest rates all over the market for a home loan.
Interest rates of home loans are meager compared to any other type of loan available in the market, such as a gold loan, personal loan, or car loan.
Home loans are easy to pay. EMI (Equated Monthly Installments) is a system used in home loans where a borrower has to pay monthly installments to repay their debt to the bank. This monthly payment, also known as EMI, consists of the interest amount charged by the bank for providing their services and a portion of the principal amount, which is paid regularly over a significant period.
Along with acquiring a home, home loans provide various other benefits such as Income tax deductions. Section 80 C of the Income-tax offers tax benefits for EMI payment, which results in tax savings and ultimately more protection for the borrowers.
One of the most significant features and often used as an advantage is home loan payment on credit score. Although a good credit score is required to avail of a home loan, regular and timely payments of home loans will improve an individual's credit score. This is very beneficial for taking loans in the future as the person with a good credit score is considered less risky by the banks. More credit is provided to such a person by any bank. Along with fulfilling the Home Loan eligibility, one also has to have a good credit score to apply for a home loan.
Although it is not necessary to open up a bank account to avail a home loan service from a bank, a person who does open their account with the bank is sure to get many customer loyalty benefits which can be low-interest rates and easy availability of loan services.
Home loans are very readily available with less documentation. The process has been simplified, keeping in mind the customer and providing them with the maximum value in less time.
Conclusion-
Home loans are a typical example of a loan where an individual can quickly achieve and avail of the dream of their house. Home loans are quickly available, and many lenders are offering the same in the market.
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