At some point in our lives, we all dream of owning a home and becoming a home owner. Apart from the financial security, a home of our own also gives us emotional security and becomes a legacy which we can pass on to our children so that they do not have to struggle for making a home of their own and can focus all their energy for creating a happy and purposeful personal and professional life. While there’s nothing like buying your home without any external funding, more often than not you will have to take a home loan to fill the gap between your contribution, i.e down payment, and the property price. In these articles, we will share the different home loan terminologies you should be aware of before you apply for a home loan.
Home Purchase Loan
This is the most commonly availed loan, which is disbursed by the lender for helping the borrower purchase a house property that is either in the under-construction stage or is ready for occupation with all necessary clearances in place.
Joint Home Loan
A home loan is classified as Joint Home Loan when the loan is taken in the name of two eligible individuals. You can make your spouse a co-borrower for the loan and get the tax deduction benefits that apply to a home loan. Experience aristocrat living at ruparel panache santacruz
EMI
EMI is the short form of Equated Monthly Installment. This is the monthly amount which the borrower has to pay every month to the lender, and consists of both, the principal amount as well as the interest component of the loan. Basis the tenure and interest rate of the housing loan, the lender pre-calculates the EMI before disbursing the loan amount.
Tenure
Lenders offer home loans for a specific period of time, ranging from 5 to 25 years. In home loan parlance, this period is called Tenure. The loan interest rate is calculated on the loan tenure, and the more the tenure, the more the interest rate.
Interest
This refers to that amount which the borrower has to pay in addition to the principal loan amount and is one of the components of the EMI amount. You can choose from either a fixed interest rate or a floating interest rate. In the fixed interest rate option, the EMI remains the same for the entire loan tenure, while in the floating interest option, the EMI amount fluctuates to factor in the changing market conditions.
Home Loan Balance Transfer
During the term of your home loan, if you come across a lender who is offering you a home loan at a lower interest rate with better terms and conditions, you have the option to switch your home loan from your existing lender to this lender. This switching process is called Home Loan Balance Transfer. ruparel panache santacruz project offers ultra comfortable designs.
Top Up Loan
This is an additional loan provided by the bank or housing finance company on your existing home loan, and can be used for any personal goal such as a family wedding, buying a new car or even enjoying a dream vacation. The documentation is such a loan is minimal as you are already availing a housing loan from the same lender.
Collateral
As home loans involve amounts in lakhs and sometimes even in crores, lenders mortgage some valuable asset as security in return for lending money for the home loan, which the lender can sell and recover their dues in case the home owner defaults in loan repayment. IN case of a home loan, the property for which the loan is provided is considered as Collateral.
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