Any India resident, non-resident Indian or Person of Indian Origin can apply for a home loan if they are 21 years of age at the origin of the loan and 65 years or below at loan maturity. Housing Finance Companies (HFCs) usually give home loans for properties located in India to people who are employed or self-employed with a regular source of income.
An individual can apply for a home loan even before the property has been selected. The loan amount is sanctioned based on the ability to repay. This helps in planning a budget while purchasing the house.
Loan eligibility is calculated based on the ability to repay. Factors such as income, age, qualifications, number of dependents, spouse's income, assets, liabilities, stability and continuity of occupation and savings history are taken into consideration.
You can repay the loan in Equated Monthly Installments (EMIs) comprising principal and interest. Repayment by EMIs commences from the month following the month in which you take full disbursement. Till then, you only need to pay the interest on the amount disbursed.
Before final disbursement, you may have to pay interest on the portion of the loan disbursed. This is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of EMI commencement.
A rate of interest that is constant throughout the duration of the loan is known as a fixed rate loan.
A floating rate is when the interest rate on the loan changes according to the rates in the market during the period of the loan.
If interest rates are falling, a floating rate loan is a better option. But when interest rates are rising, opt for a fixed rate loan because you will then know in advance what your EMIs will be.
On the basis of the principal at the start of every month, the interest is calculated in monthly rest. For annual rest, this is done at the beginning of every year.