Invest in Real Estate by Getting Home Loans in India

Invest in Real Estate by Getting Home Loans in India

The loans that actually exist seem to be a far cry when a potential borrower is bound by the constraints of income. But, in reality procuring such loans is not that difficult as it seems.

Right after the green signal for cent percent FDI in the real estate sector from the Indian government there has been a sea change in this sector in India. As such, FDI in the real estate sector has gone up from 4.5% in 2003- 2004 to 16% in 2005-2006 and it has been increasing since then.

This liberalisation of the Indian economy has led to the emergence of many lenders in the country. As such, this trend has brought about a favourable change for the potential borrowers as well i.e. the changes in the payback terms and conditions. Moreover, with the application of the information and communication technology procuring a loan has become much easier. All these factors have led to the elimination of the time that was required earlier to procure a loan and the processing fee.

There are various types of businesses within the domain of Real Estate. A large number of people earn their living with such businesses associated with Real estate. Such businesses may be professional valuation services, mediator, broker etc., between two parties in the business pertaining to real estate. There are also businessmen who do construction works on a land and management of these constructions and the real estates. There are also professionals who deal with the sales and marketing of this sector.

In order to procure a home loan in India an employed borrower must furnish documents pertaining to employment status and the salary slips of around last six months. When the borrower is a self employed man, he is generally required to furnish a balance sheet, profit and last account of at least three years etc. Further, an individual must have attained 18 year of age, possess permanent residential proof like PAN card, Voter ID card etc. In addition, a bank statement would put a client on an advantageous position.

A home loan in India can be utilised to construct new building, reconstruct already existing building and for various other purposes pertaining to house construction. Such loans are available in two different forms which are secured and unsecured. When it is a secured loan the prospective borrower should pledge an asset as security against the loan sought. Due to the involvement of the security the rate of interest of secured loan many reasonably be less and the debtor may bear the loan for a longer period. The debtor may also be in an advantageous position to bargain for more loan amount. Similarly, this security puts the lender also at the advantageous position by lowering the risk on his part to lend loans.

On the contrary, when it is an unsecured loan the prospective debtor need not pledge any security. Thus he may not be in a position to bargain for himself. Owing to the insecurity the client may need to bear higher rate of interest and shorter repayment period. Moreover, the credit amount may also be relatively smaller.

Home loan in India is offered by a number of banks like Punjab National Bank, HDFC, SBI, ICICI. These banks deliver the loans at relatively easy EMIs and decrease the burden on the borrower to pay of the credit.

Home loans are also very helpful in purchasing real estate property in India. It is because the population of the country is more than hundred corers and purchasing a real estate property here is definitely a big deal since the majority of the population of the land are not sound enough to purchase a real estate without the support of home loan in the country.