|Rate of Interest
Himalayan Bank Limited
|Base rate + up to 5.50%
Nepal Bank Limited
|BR+2.11 to BR+2.72
Nabil Bank Limited
|Up to 20 years
Bank Of Kathmandu Limited
|Base Rate + 0.50 to 6.00%
|Up to 20 years
Laxmi Bank Limited
|Base Rate + 2 to 6%
|Up to 25 years
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Home purchase loan – It is the most common type of home loan. All banks and housing finance companies offer loan for residential properties at different rates coupled with discounts and rebates. It can be availed for both resale properties and builder allocated units.
Land/Plot loan – Banks offer such type of loan to buyers intending to purchase land parcels for constructing their residential units. About 70 percent of the total cost of the land can be availed.
Construction loan – Most common type of home loan availed by a major share of semi-urban population to build a home meeting their requirements on a land parcel you already own. All housing finance companies and banks provide home construction loan.
Home extension/improvement loan – You can also avail loan for any sort of extension or improvement in your house, be it a new room or a new floor. The housing finance companies and banks offer loan for home improvement/renovation purposes such as painting, plumbing, electrical system, interior designing and waterproofing.
Home conversion loan – Such home loan is taken by people who have bought a house on a home loan but would now intend to buy and move to new house. With these loans, applicants can fund the purchase of the new house by shifting the running loan to the new unit.
Balance transfer loan – It can be availed when an applicant wishes to transfer home loan from one bank to another. It is usually adopted to repay the remaining amount at lower interest rates.
NRI home loan – It is designed for NRIs who wish to construct or buy a home in India.
Taking home loan on a fixed interest rate implies that your EMI will not be impacted during the loan tenure irrespective of any market conditions. The interest rate will be pre-determined and remain unchanged. On the flip side, home loan EMIs vary periodically over the loan tenure, if taken on floating interest rate.
There are some hidden charges applicable while opting for a home loan.
- Conversion Fees
- MODT Charges (Memorandum of Deposit of Title Deed)
- Document Retrieval Charges
- Administrative Charges
- Legal Fees
- Valuation Fees / Inspection Fees
- Documentation Charges
- Switching Loan Package
- Changing Loan Tenure
- Statement of Account
Calculating the monthly interest levied on your home loan is easy. Follow these steps –
- Divide interest rate by the number of payments. If you are making monthly payments, divide by 12.
- Multiply it by the loan amount.
Doing this will give you the amount of interest.
The process of getting a home loan is simple. But you need to be aware of all documents required before applying for the loan.
- Fill loan application form with all required documents
- Pay processing fee
- Discussion with the bank
- Valuation of the submitted documents
- Loan approval process
- Processing of the offer letter
- Legal check
- Final loan deal, signing the agreement, and disbursal
Processing fee charged while applying for home loan varies from bank to bank. Typically, the processing fee is about 0.5 percent to 1 percent of the loan amount + applicable Service Tax and Surcharge. The maximum processing fee ranges between Rs 10,000-15,000 excluding applicable taxes.
All banks provide loan against properties at different interest rates.
EMI stands for equated monthly installments. As a borrower, you need to pay the lender a fixed amount every month on a specified date. The EMI is the sum total of the principal amount and the interest amount divided over the tenure of the loan. However, your monthly value is fixed for each month, the principal amount paid and interest amount paid changes every month. For the first few years, the interest portion is higher. With time, the interest amount keeps reducing and principal amount keeps increasing. Therefore, your 70-75% interest will be paid in the first few years of the entire loan tenure.
Home loan is a loan taken from any financial institution for buying a house. The EMI that is calculated for this loan is termed as a Home loan EMI.
For home loans disbursed against an under-construction property, the lender can offer an EMI that begins once the construction is complete. Until then, you can pay just the interest part of the loan that is termed as a Pre-EMI. Pre-EMI amount is less than full EMI amount since you will be paying just the interest component of the EMI and the principal loan amount remains intact. The Pre-EMI duration is not a part of your home loan duration. Let’s take an example to understand this better. Say you have a loan of 15,00,000 lacs for 20 years on a property that gets completed in 3 years. Your calculated EMI is Rs. 25,000/-. During these 3 years you can pay the interest part of the EMI. That would be your Pre-EMI and the total loan duration would be 23 years (20+3).
You should opt of Pre-EMI if:
- If you wish to save money during the pre-EMI period and invest it in such a way that they get good returns on the amount saved.
- If you wish to sell your property once the construction is complete.
- If you are waiting for an income change and feel now it is not possible to afford a full EMI.
EMI is calculated using a simple mathematical formula, that is EMI Amount = [P x R x (1+R)^N]/[(1+R)^N-1]. Here P stands for the principal loan amount, R is the rate of interest and N is the number of years for which the loan is taken. The value of the EMI changes according to these variables.