Home loans help millions of people fulfill their dream of owning a home. Many financial institutions lend money to home buyers with an agreement that the borrower will repay in the form of EMIs or Equated monthly installments. The disbursal of the home loan is completed after the legal paperwork is completed. The home loan agreement is a legal document that lists the clauses of the home loan agreement. These state the terms and conditions for the loan disbursal and repayment with legal implications. Home buyers who opt for a home loan must understand these clauses very clearly so that there are no surprises in the future.

This blog discusses important clauses in a home loan agreement taken from our home buying guide:

1. Loan Amount and Interest Rate

The loan agreement for flats in Ernakulam mentions important information about the loan viz the loan amount and interest rate. The loan amount is the amount borrowed and the interest rate is the cost of borrowing. Flats in Ernakulam have steep property prices and these details help the borrower understand their financial commitment.

2. Tenure and Repayment

The loan tenure is the period over which the borrower repays the loan. It is an important entity as the tenure or period is used to calculate the EMI amount. The tenure is chosen by the borrower and approved by the lender. It should be chosen after evaluating the financial status so that there are no delays. The repayment terms, prepayment penalties, and other charges are mentioned in this section.

3. Fixed vs Floating Interest Rate

The real estate market is subject to economic fluctuations directly impacting interest rates. The interest rate is also used in the calculation of EMIs. A fixed interest rate ensures that the EMI remains stable while a floating rate may change based on external factors like economy and market conditions. This is clearly mentioned in the agreement and should be cross-checked.

4. Loan Disbursement

The loan is disbursed in phases as and when the project crosses the set milestones like booking, stages of construction, and possession. As apartments in Kochi meet these requirements the lender releases the payments after verification. This information needs to be mentioned and understood by the borrower.

5. Insurance Clauses

Lenders require borrowers to buy insurance like home insurance and mortgage protection insurance. These act as a safety net against unforeseen events so that the borrower and lender are protected from financial losses. The insurance clauses are mentioned clearly in this section to be read and understood by the borrower.

6. Default and Penalty Clauses

The default and penalty clauses are charges levied on the borrower in case of delayed or defaulted payments. The penalty clauses, interest on delayed payments, penalties and impact on credit score should be mentioned. Understanding these is crucial for the borrower in case they can’t pay due to unforeseen circumstances.

7. Prepayment and Foreclosure

Prepayment and foreclosure conditions are charges applied by the lender in case the loan is paid before the end of its tenure. The terms, conditions and charges are explained in this section.

8. Legal and Regulatory Compliance

The loan agreement must adhere to all legal and regulatory requirements. This includes verifying the property documents, obtaining necessary approvals, and ensuring that the transaction complies with the Real Estate (Regulation and Development) Act, 2016 (RERA).

A home loan is the only means of buying a home for most. The application for the home loan is thus a crucial part of the process since the application forms the basis for the home loan approval. The borrower must have the best application to secure the loan to fulfill his dream.

Let us consult our home loan guide to avoid the common mistakes in the home loan application below.

1. Checking Credit Score

We are all aware that most agencies offering loans use the CIBIL score . The CIBIL score is a credit score that provides information about the buyer’s history of repaying loans. To get a home loan in Kerala buyers must have a good credit score. A borrower must always check their credibility via the CIBIL score before applying for a home loan. If the score is below the acceptable norms, then it can be improved before applying for the loan.

2. Research

The real estate industry is in a boom like never before. Every major bank and financial institution wants a bigger piece of the home loan pie as loans are the only means for owning a property for most Indians. As a result these players are trying to offer the best rates to attract the most number of loan seekers. By researching thoroughly home buyers can choose a bank loan that offers the best interest rates and repayment conditions. Skipping this step can cost the borrower dearly.

3. Documentation and Procedure

The fine print has all the information about the home loan and knowing these are crucial for the borrower. The borrower must understand these thoroughly and consult an expert before signing the papers. The terms should match the borrower’s ability to repay and should be no ambiguity. Many agents may try to manipulate the borrower which is a dangerous trap. The borrower should be vigilant and not blindly believe what the agent or the bank says.

4. Personal Financial Planning

Home loan repayments are made in EMIs (Equated Monthly Instalments). The borrower should allocate funds for the down payment and EMI payouts. After factoring in the monthly expenses and other commitments, borrower should decide on the quantum of the EMI payout that they can make. The home loan, interest rate and down payment can be determined based on all of the above calculations. This step is as important as any if the buyer wants to repay the loan amount on time without incurring penalties.

5. Down Payment

The down payment is a mandatory payout to be made before the loan is sanctioned as no financial institution finances 100% of the home price. The borrower should have this amount ready before applying for the loan.

Consulting a home loan guide or legal experts before making the decision to buy a home is always prudent. It is better to be safe than sorry.

With the demand for luxury living on the rise, property developers compete to offer unique experiences to their patrons today. Luxury residences go beyond opulent properties in posh localities with rich interiors. The new and upcoming projects are innovative and inventive to create experiences that stand out and lure the uber-rich home buyer.

Some of the trends in luxury flats in Kerala are discussed below.

1. Work-life balance

Working professionals today do not want to travel long distances for work. The trend of walking to work is fast catching up. Most millennials want to stay away from the hustle and bustle of the city and strike a perfect work-life balance. Remote working is a reality and luxury homes must accommodate offices with WIFI connectivity. Convenience is the new benchmark of luxury living with many avenues for socializing now included in the premises of luxury projects. Residents can invite guests and families to spend time and celebrate special occasions at world-class cafes, gourmet restaurants, halls, and banquets.

2. Exclusive amenities

Exclusivity lures luxury home buyers as they want to stand out in the crowd and get noticed. Grand architecture, designer facilities, and eclectic interiors add to their confidence. Amenities such as concierge services, fine dining events, extravagant clubs, terrace pools, spas, and mental well-being avenues are not restricted to five-star hotels alone. They are in demand in luxury apartments in Kochi too.

3. Smart homes

Luxury homes integrated with smart technology enhance luxury living by many folds. Smart homes allow devices to be controlled using a remote control or on applications in mobile phones. Luxury flats for sale in Kochi can adjust room temperature, control lighting, adjust sound, and change TV channels using voice-controlled bots. By using artificial intelligence and the Internet of Things devices will be able to communicate with each other and operate independently after being programmed. Luxury smart homes changing the way we live and reducing our carbon footprint by saving non-renewable energy resources.

4. Next-level security

Luxury flats in Kochi are equipped with security features like CCTV cameras and voice recognition systems that provide security to their patrons like never before. These gated communities have trained security guards, firefighting systems, intercom facilities, and alarm systems that work in sync to provide the best security to residents.

These developments in the luxury residences of Kerala are changing how home buyers and investors perceive luxury living.

‘Home’ conjures up images of comfort, joy, pride, and family. One of the biggest financial decisions you will likely make in your lifetime is whether to buy a home. If you are thinking about applying for a home loan, that decision becomes much more significant.

The majority of loans are regarded as liabilities. However, a house loan cannot be compared to gold loans or personal loans because purchasing a home is creating an asset that often increases in value over time, making home loans advantageous in the long term. The benefits of taking out a home loan are highlighted in the article below.

1. Affordable for all

A typical middle-class salaried individual may now more easily afford to buy a home, thanks to the home loan. Based on the applicant’s credit score and capacity to repay the loan, banks decide whether to approve or reject a home loan application. Lenders will rapidly accept your application if you have a steady source of income and the ability to make the agreed-upon EMIs. Home loans also have a lengthy term, often between 15 and 20 years, so the EMI is lower and more manageable.

2. Cost Effective Credit

In contrast to other kinds of loans, like gold loans or personal loans, lenders provide home loans at appealing and cheap rates of interest. According to the borrower’s profile and the lender’s policy, the interest rate typically varies from 7% to 8.5%.

3. Due Diligence of the Lender

Since purchasing a home is often a once-in-a-lifetime investment, you undoubtedly want to make sure the property is clear of any outstanding legal matters. When you apply to a lender for a home loan, the lender will thoroughly investigate both the property and the builder’s reputation. They will examine the paperwork related to the property and make sure the builder has all the necessary clearance certifications from the local authorities, as well as that the construction is lawful. If you look at top builders in Ernakulam, for instance, you will find that their upcoming projects are often pre-approved because of their long-standing record.

4. Tax Benefits

This is yet another important advantage of getting a home loan. If you pledged your property as collateral for a loan, you will be able to deduct taxes on both the principal and interest portions of the payback. You may deduct the payments of the principal portion of the mortgage under Section 80C. The highest deduction allowed in this case is ₹1.5 lakh.

5. Savings

Each payment you make on your home loan is essentially also saving you money for the future, as you are building equity in the property. As you build equity, you are essentially saving money because you have a greater ownership stake in the property. This can be helpful if you decide to sell the home in the future, as you may be able to sell it for more than you paid for it and use the proceeds to buy a new home or invest in something else.