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Home loan which is sanctioned to buy or purchase or to own a house or residence is a known as a Home Loan. Any qualifying individual can avail this loan subject to the purpose of owing a residence only. This loan is not sanctioned to purchase any commercial premises like shop, office, warehouse or factory etc. Home Loan is a type of secured loan as the house or residence purchased is hypothecated to the lending institution till the full & final settlement of the loan amount. This is a long term loan and the loan repayment period could be anywhere between 5 years to 30 years. The rate of interest generally varies within the range of 8 % to 13% depending upon institution to institution. Floating interest and Fixed interest are the available interest calculation options to the borrower of Home Loan. The government policies also impact the rate of interest on Home Loan. Generally it is a practice of lending institutions to grant up to 90% of the cost of the premises where the rest 10% of the cost of the premises are involved by the borrower. In certain cases the lending institute may sanction 100% loan though it is at sole discretion of said institute.

A borrower may buy its prime residence by availing this loan or he or she may buy excess residential property. Borrower repays this loan in form of EMI – Equated Monthly Installments. A Borrower can also avail the facility of premature settlement of the loan or transfer of the loan to other residential premises.

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