Home holds a special place in the hearts of the Indians. The satisfaction of owning a house has a lot of attention. People invest in a home as they consider it a secured investment. The value of the property was never immune to the market demand-supply mechanism. These elements played their roles in the fluctuations that the prices had gone through and where they are right now. Even after the prices touched the sky, people didn't hesitate much while buying gold.
The price of properties has leaped over the past few years. Since the people have realized its worth, they started investing in it with an expectation of reaping enough yield in the form of capital appreciation.
Satisfaction is not the only fascinating thing about home objects. The satisfaction of owning a house is highly valuable and liquid. The liquidity of this property has made it even more attractive for buyers. People buy a home as an investment, use it as a hedge against inflation, and many times they pledge to fund their immediate needs. It is an excellent way of obtaining funds without any troublesome procedure.
The home loan or loan against the home is a secured form of a loan. It is guarded by the collateral, which in this case is home. Being so worthy and liquid does give it an edge over other types of collateral. The lending institutions (banks and non-banking financial companies) are not very hesitant while lending funds under home loans. Also, Home Loan processing fee is very easy and can be done online.
The reason why borrowing individual or entity prefer this loan facility because of the following reasons:
The credit facility provided against the property is provided at a meager interest charge making it affordable for individuals and entities.
The costs associated with the facility, such as the processing fee, inspection fee, and delay fee. These charges are levied by the lending institutions (banks and non-banking financial companies) to cover up their administration cost, but these are almost negligible in this case. Most of the lenders do not levy any such charge.
The documents required are minimal, leading to a short and sweet procedure. Borrowing an individual or entity has to present only the KYC documents. The borrowers can avail of funds at the earliest. No excruciating details are involved in this credit facility.
Rising property prices led to a higher home loan rate. The area and location of the borrower's collateral are of the essence here. It allows the borrowing individual or entity to have a more massive credit.
The loan-to-value ratio has now been increased to 90% by the Reserve bank of India (central bank). Usually, it is between 70% to 80%. The increase in the loan-to-value ratio helps in availing a higher loan amount. The ratio is used to determine the amount of the collateral to be sanctioned as the advance amount. The borrowing individual or entity can apply for the credit by an online platform. For instance, the Axis Bank Home Loan policy has the option where the borrowers can get nuisance-free funds via their laptops or mobile phones.
The requirements can differ for the lenders, but mostly it remains the same for various policies. The borrowers must attach the documents dutifully to the form and submit them to the lending institutions they choose. The laws formulated are the practice that helps people understand how the entire procedure will take place.
The points discussed above are some of the key factors contributing to the home loan's upward trend. The market for this credit facility has substantially expanded. The demand is increasing due to the benefits that this facility brings along for the borrowing individual or entity. Every year, financial organizations mark a new high for the demand for home loans. Managing a home can be an asset, and at the same time, it can be a liability. The lending institutions have kept this option very simple so that the borrowers can have the earliest monetary assistance.
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