100% finance home loan, as the name indicates, is the sanction of the entire amount of the house. In these loans, you don’t need to make a down payment for the house from your own financial resources. The bank finances completely. However, the borrower needs to provide collateral and liquid securities. For people who have not been able to save money for a down payment but have a good source of income to meet monthly installments of the loan, these loans are very advantageous. However, these https://vbslendumo.com/ loans have drawbacks as well. Here are the considerations.
Advantages of 100% financing home loan
The most obvious advantage of 100% financing home is that you don’t need to make any kind of down payment. So, if you find a great property which is perfect for you, this kind of loan lets you buy it instantly. You don’t have to lose a great home because you did not save sufficiently to make the 20 percent down payment.
The second advantage of this kind of a loan is the monetary benefit. Since you own a home, you can either give it on rent or live in the house yourself and save rental money. Also, since you save money on the down payment, you can use your savings to furnish the home or invest in other lucrative avenues.
Disadvantages of 100% financing home loans
Something that is as good as 100% finance is sure to have some kind of limitation. The major problem is that you still have to spend some amount towards the loan in terms of paperwork and legal aspects.
Secondly, the rate of interest is much higher than a conventional loan. You can structure the loan as per your convenience and in keeping with the rules and regulations of the bank. However, since you do not put in down payment, you are considered a “high risk” customer and flexibility is lower.
You end up paying much more than the value of the house because of two reasons – first is that you pay higher rate of interest on the entire amount and second is that you have to repay a higher loan balance because you do not pay anything in the beginning. In addition, lending charges are higher, insurance is higher, prepayment penalties are higher and you must show some concrete evidence of liquid securities in the form of bonds, NSCs or LIC policy.
Finally, the biggest limitation is that these loans are very difficult to get. Lending criteria are tougher than ordinary loans and so is the paperwork required. There is always a high risk of hidden costs for these loans. So, the borrower needs to be very careful and should understand terms and conditions thoroughly before taking the loan.
How to get 100% finance loans?
Different banks have different criteria to evaluate eligibility of the applicant. The applicant needs to submit the filled form along with identification proof, residence proof, proof of employment/business, home agreement papers and quotations, collateral proofs, proofs of liquid assets, non encumbrance certificate, approved plan of the home, permissions from municipal corporation, IT returns and bank account at least for the past six months to one year. Your credit record is checked by the bank. Loan is not sanctioned if the applicant has defaulted previous loans, has huge outstanding credit card dues, filed bankruptcy or has not repaid previous loans.
Which banks offer these loans?
SBI offers 100% finance home loans under its “Freedom” program. There are very few other private banks which offer this feature. HDFC offers 100% for home improvement for existing borrowers but does not offer 100% for home purchase.
Spot conveyance is utilized by vendors toward the end of the week or after bank hours to have the option to convey a vehicle when a last endorsement can’t be gotten from a bank. As a rule an advance is a measure of cash that is loaned to an individual, a business, or another substance. The gathering that loans the cash is known as the moneylender, while the gathering getting the cash is known as the borrower.