Everyone dreams of owning a house. It is considered to be one of the three necessities of life: Roti (bread), Kapada (Clothing), and Makkan (House) in that order. Once you complete your studies, take up a job, and get married, you start dreaming about your own house as you would have met or got the confidence that you would be able to meet the first two needs. However, building or buying a home of your own would be one of the major decisions you will be making in your life. This is because you will be making a long-term financial commitment.
Deciding to go in for your own home is an important decision in your life as it forms part of your goal to secure your family’s future.
That said, most people in India would need some kind of financial assistance to help them fructify their dream.
To cater to this need, many banks and other financial institutions in India extend home loans to eligible individuals.
If you are planning to buy a new home, you must have a clear idea about home loans and mortgages to make an informed decision.
Simple mistakes that many people make can cost them a great deal of money over the term of the loan that often runs into 20 to 30 years.
This home loan guide will take you through all the aspects you need to know before applying for a home loan and buying a home for yourself. So, let us get started.
What Is Home Loan
A home loan can be defined as the amount of money borrowed by an individual from either a bank or a financial institution at a specified rate of interest. The money borrowed should be paid back based on equated monthly installments (EMI) within the agreed period. Often, the borrower offers the property as collateral security for the money advanced by the lender for buying the home. The property may be personal or commercial. If the borrower fails to repay the loan amount, the lender can legally recover the outstanding amount by selling the property that was offered as collateral security.