What is a housing loan?
A housing or home loan is a sum of money borrowed from a bank, lender or financial institution to purchase a house. Like all loans, the amount borrowed has to be repaid over a period of time with interest.
Banks and financial institution offer different loan packages to cater to the needs of different users. Compare rates and choose a loan based on its features, fees and charges, as well as the level of service offered by the institution. Be sure to have all the necessary documents for your application beforehand.
The time length of a housing loan can last up to 30 years or when the borrower reaches the age of 65, whichever comes first.
What is a lock-in period?
Banks usually charge a penalty of 2% to 3% (on your original loan amount) if you pay off your housing loan in full within the first 2 to 3 years. This ‘2-to-3-year’ period is known as the lock-in period of your housing loan, meaning you will have to pay a penalty for early settlement.
How do I apply for a housing loan?
You’ll need to compare the types of housing loans available to you offered by various banks and lenders, as well as learn about interest rates, flexi, semi-flexi and non-flexi loan options. For instance, a flexi option allows you to put withdrawable additional money in your loan account while a semi-flexi loan means you’ll get charged when withdrawing money from the account.
Next, decide which bank or lender has the best housing loan for your needs. Then, contact them and they will advise you further on what to do next, especially regarding required documents and paperwork, plus what criteria needs to be fulfilled.
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What is a personal loan?
A personal loan is money borrowed from a bank or lender that you pay back in fixed monthly payments over a period of time, usually with added interest charge. Most personal loans are ‘unsecured’, meaning they are not backed by collateral. A secured loan backed by an asset (like car or house) is usually cheaper, but you can lose the asset if you fail to make repayments.
Banks and lenders generally make their decision to approve or reject a personal loan application based on various factors, including credit score and debt-to-income ratio. Consumers with excellent credit health and score usually receive the lowest rates.
Why should I apply for a personal loan?
People apply for personal loans for many reasons, generally to finance something important they don’t have ready cash for.
Some of the most commons reasons include:
- To consolidate debt
- Financing home renovations
- To make a large purchase
- Fee payment for short education courses
- Unplanned emergency expenses
How do I apply for a personal loan?
Most major banks and lenders offer personal loans to individuals. Here are a few steps to get you started:
- Check your updated credit report for your credit score
- Shop around for personal loans
- Compare all options to find the most suitable one
- Contact the bank or lender that offers the best loan to apply
