Home loans are generally applied for by the middle class sections in Palakkad, Ottapalam, Angamaly, Vaniyamkulam areas of Kerala. The houses that are bought with loans are 1 BHK, 2 BHK, 3BHK, 4BHK, and villas. It has been found that the villas or bungalows are either bought by the upper middle class or body corporates. The houses are to be bought according to necessities. If you have only 2-3 persons in a family, among which one is a child, then 1 or 2 BHK will be favorable. If there are more than 3 persons, then you can choose from the rest. In Palakkad or Ottapalam, the 1 BHKs start from around 15 lakhs, 2 BHKs start from 27 lakhs and for the rest, the price will go higher. Let’s take a look at how these bank functions.
Banks providing home loans
If you are applying in Punjab National Bank, then they will charge you around 9.10-11.25% per annum for salaried people. For others, the rate of interest may go up to 12.5% per annum and this amount includes the processing fee
If you wish to borrow from Axis bank, then the basic processing charge on the loan amount will range between 0.15% to 0.35% depending on whether you are a salaried professional or a businessman. The floating rate of interest is much less than that of PNB and could be a maximum of 9.10%.
If you wish to borrow from Indian bank, then the starting interest rate is quite low, which is 8.60%. The maximum limit is 9.70% for business persons. This bank will offer you a home loan for a tenure of maximum 20 years.
Bank of Baroda
If you will be buying a villa and are sure that the term period may extend up to 30 years, the Bank of Baroda is the best choice. The rate of interest starts at 8.75%.
If you wish to apply for a loan from HDFC bank, then the bank will charge a rate of interest in between 8.90-9.40% per annum for women. For loan applicants other than women, the interest rate can go up to 9.45%. To process the loan, the banking officials will take a processing charge of up to 1.25% on the loan amount. HDFC provides various types of home loans to cater to needs to all.
Tips for first-time buyers
Among the first time buyers, there could be an individual or a group of two-three partners forming a company. In the former case, the rate of interest and processing charge will be lower in comparison to the latter case. So, we will be putting forward tips for both groups.
- If you are an individual, then you should apply for a home loan when your one month salary is at a level that will allow you to provide for at least two month’s EMI along with the processing fee. A small company, when applying for a loan, should also keep in mind about the EMIs. They might be taking the loans for a 4BHK or a villa. In that case, the processing charge will be higher. So for them, it will be better to keep a constant working capital to finance the EMIs.
- Keep a good credit score. For individual loan takers, the credit score will improve by how much you are repaying the loans. The small companies can improve their credit score by improving their goodwill and prompt loan repayments in the market.
- When you are aiming for a home loan, you must know, that most of the times you will have to mortgage the house and if required you also might have to mortgage the cash securities. So, you must think until when you will fully repay the loan. If you are not able to pay the loan and the interest within the time stipulated by the bank, your mortgaged properties will be acquired by the bank. So calculate maximum amount that you can repay from the time period you have in hand. Don’t buy a property, whose loan you cannot repay within time.
- Always research on the banks offering the loans. Some banks have lucrative offers for individual buyers, some are more lenient towards companies. So not every bank have ideal home loan offers for all customers. Make a note of the interest rate, repayment period and processing charges of multiple banks and then finally narrow down a bank for a loan.
- This tip is for individual buyers. If possible clear some of the EMIs in one month. This is possible when your salary amount is at least 3 times higher than each month’s EMI. If you clear some EMIs as a lump sum amount, then your loan principal and rate of interest may decrease.
All in all, first-time buyers spend a lot of time stressing about how they should go about applying for home loans. This article will help them in choosing the loan based on the schemes offered by the banks. Make use of these tips and always keep improving your credit score. If your credit score is bad, then no bank will be keen to give you home loans at any point of time.
To know more about other required documentation check out the blog – Must follow checklist before buying your villa in Palakkad.