Please see information on Home Loans below.


Home loans are used by many people across India and the purchase of a home is one of the most important financial steps in life. Here are some basic facts and FAQs on this type of loan.

What is a Home Loan?

A home loan is a loan which allows you to:

  • Purchase a home
  • Construct a home
  • Renovate or expand your existing home

You can apply for a home loan even before you have found a home which you would like to purchase. This is known as an in-principle approval on a home loan, and this is then valid for a total of 3 months. In this time you can plan your home purchase, because you have been given a loan amount with which to purchase the home.

You can also apply for a home loan directly.

How Do I Apply for a Home Loan?

Applying for a home loan requires some forethought. This is because every lender or bank requires a certain amount of documentation, which will then be approved, before you can receive the loan.

Usually, after you have provided the necessary documentation, you will have to wait until the bank has gone through it in detail and checked your credit history, to see if you are eligible to take the loan.

Am I Eligible for a Home Loan?

Most banks and lenders will have a certain list of requirements which you must pass in order to avail the home loan. These usually include:

  • Minimum age 21 years
  • Maximum age between 65 and 70 years
  • Proof of ID - passport, driving license, voter's ID or PAN card
  • Proof of residence ration card, LIC policy receipt, utility bill
  • Proof of income (whether you are salaried or self employed)
  • Documents of security for collateral (e.g. life insurance policies, shares, other investments or equitable property)

How Much Can I Borrow?

The amount you can borrow depends on the bank, so make sure you include this in your search and comparison. The loan amount may also depend on your circumstances, including your income and credit history.

Are there any Fees?

When you apply for a home loan, you should think carefully about the financial obligation you are about to enter. Not only will you be paying the loan repayments and interest, but you may be subject to additional fees. These can include:

  • Administration fees
  • Processing fees
  • Valuation fees
  • Legal fees

Make sure you consider how you will fit the loan into your everyday costs. A home loan can last many years and while you may be able to bear the costs now, will you be able to afford the loan in the future?

Remember: A home loan is a secured loan, which means you have to provide security as collateral. If you fail to keep up with your loan repayments, you could end up losing those securities to the lender.

Interest Rates

The interest rate is an important part of your loan, and there are two main types of interest rates:

  • Fixed interest rate
  • Floating interest rate

The fixed interest rate means that you will pay the same amount of interest throughout the tenure of the loan. A fixed interest rate is beneficial if there is likelihood that interest rates will move upwards in future. However, it can be disadvantageous if they do not move upwards and in general fixed interest rate loans can be less cost-effective.

The floating interest rate means that the interest rate will change according to changes in the market. As the market rate changes, so banks and lenders will change their rate accordingly. A floating rate is more beneficial if rates are likely to move downwards in the near future.

What Types of Home Loans can I Avail?

There are many types of home loans, including:

  • Home Purchase Loans
  • Home Improvement Loans
  • Home Construction Loans
  • Home Extension Loans
  • Home Conversion Loans
  • Land Purchase Loans
  • Bridge Loans


Please Note: www.whichwaytopay.in is not authorised to give advice under Indian financial regulations.

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