Any individual who is planning to take a home loan in India should be familiar with the terminology that of property loan financier as well as the loan agreement mentioned. An understanding of such terms makes a housing loan deal clear in the mind of the individual/ loan seekers (borrower). Here are some terms that one must know while you go for a search of home loan in your city.
The Banks do not finance you the entire amount of the housing property, they will finance you for 80% – 90% of the loan amount & the remaining amount has to come from the pockets of the borrower.
Once you decide to avail a home loan, the very next thing that comes in your mind after filling up the application form is that choosing between fixed and floating rate of interest here is the time when you put yourself in a 50-50 situation.
Whatever the Rate of Interest may be the EMI (Equated Monthly Installment) is the impact, So you opt for a fixed home loan rate and the bankers advise us to go for the same. People assume that once they choose the fixed rate plan for themselves, the rate of interest will remain unchanged over the entire tenure of the repayment period irrespective of any subsequent increase in the same. But generally this is not the case.
Here is the nature of fixed interest rate for housing loan so that you could make a proper decision over the matter.
All the banks in India include the reset clause on fixed interest rate in their home purchase loan agreement papers. So for example if you had taken the loan at 10.5 per cent for 15 years it does not mean that the same rate will be applicable all across the tenure.
India’s housing finance companies & banks has introduced a clause as per which it has right to revise the fixed rate home loan after two years & can also revise the rates after 5-years of disbursing the loan.