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What is Home Loans and Benefits of Home Loans
A Home loan is a loan provided by a bank/financial institution to finance the purchase/construction/renovation of a residential property. It is a much sought-after product because often people do not have the required capital to fund their purchase.
Earlier, there was little borrowing and people generally tried to avoid creating debt.Now with the situation having undergone a change, borrowing to create an asset is not only common but in many situations makes good economic sense. A house is generally considered to be an appreciating asset. This is because the price of the property is expected to rise over a period of time. This makes financing of such a purchase by borrowing a good way to own and create an asset without having all funds for the purpose. Financial planners will always advise against taking a loan for undertaking expenditure but encourage borrowing for buying a house.
The prices of houses in India have shot up quite significantly. This makes a full payment for a house from the existing savings a very difficult task for most Indians, creating the need for housing loans. There has been a sharp jump in the earnings for many people but this does not cut the requirement for a loan to purchase a house.
Home loans are typically long-term loans, with repayment periods of up to 20 years. The house financed is mortgaged with the bank providing the loan. There is an option of fixed and floating interest rate when one goes in for a bank loan. Residential property prices India have shot up significantly, so many people have no option but to bank on housing loans. A person earning Rs 5 lakh a year will aspire to own a house that costs between Rs 15 lakh-Rs 20 lakh while someone with a pay packet of Rs 20 lakh a year would like to own a big- ger house in a better locality that costs anything between Rs 75-80 lakh.
The ability to repay the loan over a long period makes borrowing affordable for an individual because it fits the monthly outgo within his/her income.
Here are some advantages of a Home Loan
With real estate prices skyrocketing in most Indian cities, it is not always possible for the average person to purchase a home out of his/her savings. In such a scenario, a home loan is an attractive option for financing the purchase of your dream house.
If you don’t own a house, you are probably residing in a rented property. So instead of paying a monthly rent to stay in a rented house, you might consider paying a home loan Equated Monthly Instalment (EMI) and stay in your own house.
You can also avail of tax benefits on the principal and interest amounts paid by you towards your home loan. This benefit would be in addition to any HRA tax benefit that you might be deriving.
Home Equity Loans – Get Loan With Ease
If you are home owner with good credit score, you can use your house by keeping it as security to attain cash from the lender. A borrower can easily obtain funds from home equity loans as these are provided on keeping their house as security. However, these finances will accumulate you from selling your house to meet some unexpected cash requirement. These finances will be secured on the borrower home, without affecting his or her existing mortgage. This is also known as second mortgage charge.
You can use a equity loans for numerous purposes. It could be for going out for a luxurious holiday, financing college education, paying off debts etc. These credits can be used for consolidating debts. It completely depends on the borrower, how he plans to use the cash.
The amount which you can get on keeping your home as equity is ranges from £500 to £100,000. This cash should be repaid in the time duration of 01 to 25 years. The major advantage of this credit is its low rate of interest. Since your home is in the custody of the lender, there is less risk of your defaulting.
These credits can be obtained by the borrower two ways those are lump sum or through credit line. Under the lump sum scheme, the entire lend will be given to the borrower at once and interest becomes payable on it immediately.
A credit line or a line of credit option provides borrowers with the choice to scrounge funds in the manner that they select, up to an utmost credit limit for which the borrower has qualified. The most preferable feature of these credits is that the interest rate is charged only on the amount of advance used and not on the entire lend.
To avail these finances applying online is the best way as it makes the process of funding very fast. With online networking of these credits make getting cash in less time.