Get to know about small home loans

Every person has a dream of getting a house of their own. As the figures suggest, there is an increased demand for home loans. People are not willing to opt for spending in bulk for a lavish home because gathering that much capital is no easy task and home loans have become easy to avail. In the growing demand for home loans, a major portion is for small home loans. Small home loan refer to small loan amounts. To understand the reasons behind this on-going trend of small home loans, you must have proper knowledge about the phenomenon.

What is a Small Home Loan?

Small Home Loans are classified as home loans with the value of up to Rs. 30-35 Lakhs. Small home loans simply indicate that you borrow less money and payback less compared to regular home loans. Similar to home loans, you need to pay a certain EMI to return the money to the lender within a fixed tenure to get the authority of your home.

Why opt for small home loans?

While both the regular home loans and small home loans work almost in a similar way, the obvious question is why small home loans. If you think this home loan plan is only restricted to the people who belong to a low-income group, that is not correct. There are three possible reasons for which you can choose small home loans.

  • If you don’t want a huge apartment or house and are looking forward to getting a small one instead, a small value plan is always a better option.
  • If you have a good amount of savings and want a little add-on to that, then no point opting for regular home-loan. Apply for a small home loan and that serves your purpose better.
  • If you wish to switch the existing plan with a new plan worth less than Rs. 30 lakhs, you can very well consider small home loans.

Benefits of small home loans

There are several beneficial aspects of small home loans which not only saves you from leaving a big hole in your pocket but helps you secure some money for the future. Not only the paying back will be easier, but the overall matter will benefit you at many levels.

  • GST, stamp duty, registration charges and other related costs will be lower.
  • If you are considering a small home, that will save you from the huge maintenance and other costs like electricity and water bills.
  • You don’t need to pay off the maximum of your salary to cover the loan. You can thus live a life you wanted along with paying the EMI.
  • The best part of small home loans is the lower rate of interest. Also, the criteria for availing small home loans will be more relaxed compared to regular home loans.

Who should opt for small home loans?

Everyone has the right to dream for their own house. The slowdown of the economy or the income should not be a barrier between a person and their dream home. No matter whether you belong to the average, lower-middle or middle-income group, you can make your dream home a reality with the whole new small home loan policy.

A typical candidate for a regular home loan has to be someone with a stable income. But that doesn’t mean that people with lower income or no-fixed income can’t apply for a loan. There are a number of people who can apply for a small home loan.

  • People with low income
  • People who don’t have any documents to prove income
  • People who need a high loan to value ratio
  • People who are self-employed etc.

For people who cannot provide important documents, the products might include features like:

  • Mandatory KYC documents
  • Interest rate higher than regular home loan products
  • Home loan tenure up to 20 years
  • Loan of up to 85% of the home value
  • Mandatory female co-applicant
  • Minimum income required
  • Minimum loan value would be 20-35 lakhs etc.

Hence, go easy on your budget, opt for small loans and enjoy the assorted benefits that come along. With the growing demands of the small home loan, the availability has increased. Look for the companies offering the small home loans, compare the interest rate, tenure along with other details and then choose the one suitable to your income and budget.