What is a Home Loan?
01 Apr 2021
What is a Home Loan?
For those looking to own a home, banks and other financial institutions offer loans for that purpose at competitive interest rates. So if you already have that dream house in sight, the next step isn't too hard. You can use a Home Loan to buy a plot of land, a flat or an apartment, build your own home from the ground up, and even extend or renovate your existing residence.
Bank of Baroda offers loans for homes to residents and Non-Resident Indians (NRIs), let us take at the types of loans you can get:
Types of Home Loans
Home Loan Advantage
Now you can have a Home Loan sanctioned that will be linked to your savings account. How it works is you can apply for a Home Loan and reduce your interest burden by the balcne amount in your savings bank account . What's more is, no interest will be will paid on the linked Savings Bank account.
Home Improvement Loan:
A loan isn't just to buy a new home; you can also get a loan to renovate or have repairs done in your current residence. Moreover, you can use a Home Improvement Loan from Bank of Baroda to buy new furniture and fittings. That makeover you wanted for your home is now just a few steps away. Tax benefits are also availbale.
Home Loan Takeover
If you have a Home Loan from any other bank, housing finance companies (HFCs), non-banking financial companies (NBFCs) and financial institutions (FIs), you can switch it to the Bank of Baroda for better floating interest rates. We offer easy takeover for loans where more than 12 EMI`s are already repaid and certain under conditions are fulfilled.
Pre-approved Home Loan
Want to have more flexibility to negotiate with builders and sellers? A Pre-approved Home Loan can help you do just that, as it gives you a loan sanction as it provides in-principal approval for the loan before you have finalised the property you wish to purchase.
Home Suvidha Personal Loan
To help you finance those home purchase-related costs, like insurance, registration, stamp duty or goods and services tax and club membership .Bank of Baroda offers Baroda Home Suvidha Personal Loan.
Pradhan Mantri Awas Yojana (PMAY)
Government of India's PMAY scheme aims to ensure housing for all in urban areas by 2022, a mission that is to be realised across the country. Bank of Baroda offers Credit-Linked Subsidy Scheme (CLSS) under the government's PMAY mission, wherein interest subsidies on housing loans are made available to certain beneficiaries. 1st time home ownership is promoted through this initiative of the government.
Interest Subsidy Scheme for Housing the Urban Poor (ISHUP):
Targeting mainly the EWS and LIG segments, the scheme aims to help address the said categories' home finance needs.
Credit Risk Guarantee Fund Scheme for Low Income Housing (CRGFS)
The government has set up a CRGFS Trust, which provides credit risk guarantees to lending institutions, against housing loans sanctioned to customers belonging to the EWS and LIG segments, without the need for any collateral.
Questions to Ask When Applying for a Home Loan
Here are some of the common questions applicants ask when they apply for a Home Loan:
What is the maximum duration/period for which I can get the loan?
Bank of Baroda grants a Home Loan for a maximum tenure of 30 years. The loan term will under no circumstances exceed the age of retirement or completion of 65 years of age, whichever is earlier. The Home Loan tenure also varies based on the loan amount and the income of the borrower.
Can I prepay the loan ahead of schedule?
Yes, you have the option to prepay the loan either in part or in full.
Who is eligible to avail of a Home Loan from the Bank of Baroda?
All resident and non-resident Indians (NRIs) between the age of 21 and 60 are eligible for a Home Loan from the Bank of Baroda.
How much does the Bank of Baroda lend?
The Home Loan amount is determined based on your repayment capacity. Other factors like age, income, dependents, assets, liabilities, occupation stability, continuity of income, savings, etc., also play an essential role.
What is the mode of repayment?
You can repay your loan amount via Equated Monthly Installments (EMIs).
What is the security for the loan?
The security for the loan is the equitable mortgage of the property to be financed.
A Home Loan helps you buy a house where raising funds appear challenging. Moreover, at Bank of Baroda, the application process is online and convenient where you can upload documents from the place of your convenience. You also can view all the types of Home Loans on the bank's website.
What are the Benefits of Applying for a Home Loan?
What are the Benefits of Applying for a Home Loan?
Buying a property is a significant milestone in life. And in today's world, you can fulfil this milestone quite easily, thanks to a facility known as a Home Loan. Yes, a home loan empowers you to become a proud owner of a property of your choice. Apart from helping you fulfil one of your life's major goals, taking on a home loan, comes with its share of other advantages. Let us take a look at the various Home Loan benefits.
The Many Advantages of a Home Loan
Here are some ways in which taking on a Home Loan can prove beneficial
As we all know, property rates are always on an upward trajectory. As such, the actual market value of your home keeps on appreciating with time. A property that may have cost you several lakh today can be worth a few crore in the future. As such, real estate is an investment that keeps on giving, thereby increasing your net worth.
High Repayment Tenures
One of the best Home Loan benefits is that you can repay your loan in long tenures. Bank of Baroda permits you to repay your loans in tenures lasting up to 30 years or 360 monthly instalments. This way, you do not need to compromise on your monthly expenses and continue supporting your lifestyle.
No Penalties on Prepayment
Another advantage of Home Loans is that you can close or prepay your floating interest-rate Home Loan before your chosen tenure. You can pay extra instalments each year (when you come upon surplus money), and repay the loan before the scheduled term. In doing so, you do not have to worry about incurring any financial penalties. This way, you can be rid of your loan burden at any time.
No Need to Live in Rented Facilities
A Home Loan helps you buy your own property and prevents you from living in a rented facility and having to move every few months or years. It proves especially beneficial if you are living in a metro city where your monthly rent may be equal to an EMI. So you may as well apply for a Home Loan rather than pay rent.
You Get Various Tax Benefits
While speaking of the various benefits on Home Loan, we cannot ignore the tax benefits you get. For one, you can claim tax deductions of up to Rs. 1.5 lakh p.a. on the principal loan amount, under Section 80 C of the IT Act of India. The only condition to get this Home Loan benefit is that you should not sell your property for the first five years. Apart from the tax benefit on the principal amount, you also get a deduction of Rs. 2 lakh p.a. on your loan's interest component, under Section 24B. These benefits apply for you as the applicant and your contributing co-applicant.
How to Apply For Home Loan Online?
Along with the many Home Loan benefits mentioned above, there is one more that not many people know about. Today, you can apply for your Home Loan without visiting the bank. Yes, Bank of Baroda has made the Home Loan application process incredibly seamless for its customers. You can directly visit our website, browse through the different types of Home Loans we offer, and begin the loan application process online. Just fill a form mentioning your personal and income details and wait to hear from us. Remember to use the Home Loan eligibility calculator to improve your chances of getting the loan sanctioned.
What is a Home Loan Processing Fee?
What is a Home Loan Processing Fee?
Banks and lending institutions levy a onetime charge on the different types of Home Loan products. This charge, known as the Home Loan processing fee. It is generally not deductible from the loan amount, and the borrower pays it separately. This is a fee to cover the loan processing cost incurred by the lender or the bank. Some banks may waive such processing charges for a Home Loan as part of special offers.
In the case of Bank of Baroda Home Loans, we charge a unified upfront fee which consist of:
Document Verification/ vetting charges
Pre sanction Inspection (Contact Point VerificationCPV) charges
Onetime postinspection charges
Advocate charges for a legal opinion
Valuer charges for valuation
Bureau report charges
ITR Verification charges
Post sanction proceesing fee table of Processing Fees for Home Loan
Area of Banking Service
Service Charges (excluding GST) w.e.f. 20.06.2019
Baroda Home Loan & Baroda Home Improvement Loan
Up to Rs 50 lakh 0.50% of the loan amount: Minimum: Rs 8,500 (Upfront) Maximum: Rs 15,000
Above Rs 50 lakh 0.25% of the loan amount: Minimum : Rs 8,500 (upfront) Maximum: Rs 25,000
The above charges are unified processing charges which include inspection, valuation and legal fees.
The above charges are for all categories of borrowers under Home Loans.
Baroda Home Loan Top Up
0.35% Minimum: Rs 5,000 (upfront) Maximum: Rs 12,500
Takeover of Home Loan (Resident /NRI/PIOs)
Flat: Rs 8,500 (upfront)
Pre-Approved Home Loan (In- Principle Sanction)
0.25% - 0.50%Rs 8,500 (upfront). Suppose the borrower submits the property documents within the validity period of a pre-approval letter. In that case, the balance amount of unified processing charges applicable to Home Loan will be recovered from the borrower.
Charges other than Home Loan Processing Fees
Banks also levy other charges like Home Loan prepayment fees or loan conversion charges. However, in case of a Bank of Baroda Home Loan, there are no charges applicable if the borrower chooses to prepay the loan amount before the tenure is over.
Impact of Home Loan Interest Rates
There is no correlation between the processing fee and the interest rate. However, your loan amount does factor in calculating the processing fee. A Baroda Home Loan is charged at the prevailing floating rate which is linked to external benchmark of REPO( RBI) or MCLR . The interest rate is linked to the Baroda Repo Linked Lending Rate (BRLLR) and is reset annually based on your bureau score(cibil).
Why Bank of Baroda for Home Loans
With a Bank of Baroda Home Loan, you can enjoy a free credit card and concession of 0.25% for car loans. Additionally, the bank offers free personal accident and property insurance with a Home Loan. You can also opt for a group credit life insurance cover when you apply. This cover protects the family against the borrower's death, and the family is not required to repay the Home Loan to the extent of the claim amount. You can pay the premium for the cover along with the EMIs.