Home loan/Housing Loan is a lump sum amount of money borrowed from any financial or banking institutions to buy a house. Home loan consists of two types of interest rates named as fixed and floating interest rates. As per the chosen interest rate, consumer repays the loan in form of EMIs for the desired tenure.
The ownership of a house is one of the key signs of success among the fast-growing Indian middle class. As the income of the average Indian family increases, there has been a continuous increase in the desire to own a house and this has led to consistent increase in the property prices over the last few years. This is true for not just the big cities but also for smaller cities across India. This unbridled price rise has made it near impossible for the common man to purchase their home through just savings.
This significant gap between the income and the desire to own a house is among the prominent reasons behind the unmatched growth in home loan business in recent years. The effect has been so much so that prospective home buyers now have multiple options to seek a home loan from banks as well as NBFCs.