Planning on taking a home loan? Here’s what you need to know

When you look up the definition of ‘Home’ on Webster’s Dictionary, you will be get the most simple and clinical answer, which is one's place of residence. For everyone, home is where we put down our roots, our values and our dreams. Most of us dream of being a home-owner, a place where you get to create your safe place.

For many, it’s not easy to purchase a home. With rising costs of real estate, it has become seemingly difficult to find a place that would not only suit your preferences but be affordable. However, there are ways to overcome the financial difficulty of buying your own home. Many people feel that taking up a home loan is a daunting task, as the burden of EMIs gives them sleepless nights. Nevertheless, that isn’t the case if you have a clear idea about home loans!

Here’s a Guide to Taking Your First Home Loan:

• Eligibility Criteria:
  First and foremost, you need to understand if you are eligible for a home loan. To apply and to be eligible, you need to be over the age of 21 years. Maximum age criteria is up to 60 years or superannuation, whichever is earlier at the time of loan maturity. You should have a consistent source of income while applying for a home loan. Salaried individuals, professionals and self-employed people are eligible to apply for a housing loan.
• Borrowing Limits:
  An individual can borrow up to 70% to 90% of the property amount as loan. You need to remember that your interest rate is different for various slabs depending upon the amount. This also depends on the tenure of the loan. Your credit standing in the market will also be checked by the bank. This is provided by the Credit ratings agency Credit Information Bureau (India) Limited (CIBIL) and a score of 750 is considered to be a good score for availing a home loan. CIBIL rates you from the range of 300 to 900 points
• Documents:
  In order to prove your eligibility to the bank, you have to submit documentary proof. Submission of identity proof is mandatory and you can submit your voter ID card, valid passport, driving license, Aadhar card and Pan Card as proof. If you are a salaried individual, you must submit the your last 3 month’s salary slip or certificate of salary and a copy of your passbook displaying your account details for 6 months. If you are a self-employed individual, you need to attach your IT returns for the last 2 years certified by a CA and passbook copies of your personal as well as business account that display your account details for the last 6 months. This acts as a proof of income for the borrower. You will also be required to submit your proof of residence by submitting a copy of your the latest utility bill.
• Understand your EMI:
  When people think of EMIs, they see this as an additional burden and a dip in their savings. However, that needn’t be the case. Firstly, your monthly instalment is based on your loan amount and the tenure. You can also calculate your EMI with Axis Bank’s home loan calculator. All you need to do is enter the loan amount and the tenure of the loan, post which the calculator will give you the EMI amount that needs to be paid per month. This tool will help you understand how much you would spend on your loan, per month and help you plan your future spending, in advance.
• Know your Interest Rate:
  One of the major factors that generally deter you from availing a home loan is the interest rate of the loan. Before you avail a home loan, you need to look for a loan that is light on your pockets, when it comes to interest rates. Also, before applying, you should know that there are two types of interest rates prevailing in the market, fixed and floating rate. Fixed rate of interest does not change during the loan tenure whereas floating rate of interest keeps changing according to the market conditions. The prevailing floating rate of interest on home loans ranges from 8.50% to 12%. With Axis Bank’s home loan calculator, you can calculate how much interest you would be paying on your home loan.

We, at Axis Bank, we constantly try to make our customers life easier. We have incorporated an easy documentation process where your loan can be processed with minimal paperwork. If you have more queries or are just concerned, being a first-time borrower, our staff is there to help you. Walk to your nearest branch and they will help you with your queries.