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How Can a Home Loan Help You Deal with Some Extraordinary Circumstances?

Highlights

  • Can a home loan help you buy a second home on time?
  • Is there a possibility of taking a greater loan amount even if you earn less? Know all that and more here!

Even as the utility of a home loan is pretty well known, there are still some aspects that you may not be aware of. You could face extraordinary circumstances like not having adequate funds to buy the second housing unit, don’t have the income to meet the proposed EMI obligations, etc. Those who know home loans have a solution to these problems are able to take control of their proceedings. But a lot many are unaware of and thus find it hard to deal when they face such circumstances. If you belong to the latter group of people, this post can make you feel at home by describing the utility of a home loan in dealing with such circumstances. So, keep reading!

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Want to Buy a New Home by Selling the Existing One But Not Finding a Buyer for the Latter? A Bridge Loan from SBI is What You Need!

The search for a dream home never ends. Due to the lack of funds, you could buy a home with not many luxuries on offer. But as you go ahead in your life, your purchasing power increases and helps you purchase a better and upgraded home. Even then, the purchase of the new unit will depend pretty much on the amount you will get on selling the existing one. In case you don’t find the buyer for the existing home soon and the seller of the new home doesn’t want to wait any further, you can apply for a bridge home loan at State Bank of India (SBI), the country’s largest lender with around 25,000 branches across India.

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A bridge loan is a short-term fund extended by SBI and the maximum repayment period is of 2 years. It comes at a higher rate of interest than a normal home loan. The rate of interest on a bridge loan is 9.90% in the first year and changes to 10.90% in the second year. The repayment happens by way of interest servicing and the principal amount has to be paid in one short. You can do so with the proceeds of selling the existing unit.

It is not known whether a bridge loan offer is available at other lenders or not.

Home Loan Eligibility Falling Short of What You Need? Think of Adding a Co-applicant

Your income might not be enough for the lender to grant the loan amount you require to buy a home. The proposed Equated Monthly Installment (EMI) may be above 50%-60% of the net monthly income (NMI) for the loan amount you seek. In that case, you can add a co-applicant who may be earning enough to pay the proposed EMI on the loan amount you want, along with you. However, the maximum loan is contingent on the value of the property you want to buy. The co-applicant can be a spouse or an immediate family relative.

Flexible Home Loans Help You Buy a Home Even as Income is on the Lower Side

If your income is on the lower side, buying a home can take the backseat. But home loans come with the flexibility of its own. You can be sanctioned a greater loan amount with a lower EMI in the beginning. This is done by increasing the tenure and ensuring the EMI comes within your budget. As your income rises, the EMI will increase and help you pay more principal outstanding. With that, the loan finishes earlier than scheduled and saves on your interest outgo.

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Employment Scenario Not Looking Good? Think of Prepaying the Home Loan with Your Savings

If things are not looking promising on the employment front due to weakness in the economy or the segment you are involved in, you can think of prepaying the home loan and reduce interest obligations. Prepayment can be made in full or parts. It will also depend on how much savings you have with you for prepayment. Full prepayment will end your home loan obligation the moment you do so. However, if you make a part payment, the principal outstanding will reduce and so will the interest outgo. In both full and part prepayment, lenders won’t charge if the loan is a floating one. The fact that home loans are usually offered on a floating basis, chances of you taking such type of loan are more.

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  • Home Loan Interest Rates September 2020
    Axis Bank7.75% - 8.55%
    Bank of Baroda7.00% - 8.40%
    Citibank8.20%
    HDFC6.90% - 7.65%
    ICICI Bank6.95% - 8.05%
    Indiabulls Housing Finance Limited8.80% - 11.05%
    Kotak Bank7.20% - 9.30%
    LIC Housing6.90% - 7.90%
    Piramal Capital & Housing Finance9.00% - 9.10%
    PNB Housing Finance8.60% - 9.45%
    Reliance Home Finance8.75% - 14.00%
    State Bank of India/SBI6.95% - 7.60%
    Tata Capital9.20% - 9.35%