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Tuesday, July 12, 2022

Here are the things to look for a when selecting to a home loan.

Here are the things to look for a when selecting to a home loan.

10 Key Factors to the  Consider While a Taking to a Home Loan

Owning a home is one of the important goals we are aspire to the achieve in a life. It is one of the biggest investments, financially and the  emotionally. Hence, buying a home needs huge a financial support. If you are short on cash or do not want to the  liquidate to your investments, a home loan can be offer a great financial assistance. It is a common type of the loan that are individuals can be a usually borrow from a bank/ housing finance company to the  fulfill in the goal of having in their own house. With a easy monthly repayments and an a option to  choose the loan tenure as per your requirements, a home loan proves to be a simplified solution to make your dream of owning a house come true. This article elucidates the key factors to the consider while a taking a home loan to the simplify your home loan application and the  repayment in a process.

1. The Rate of Interest:

The interest rate of your home loan plays a significant role in a deciding whether or not to the avail of a loan and which lender to the  choose. We all are aware that we should do thorough research before finalizing in  the lender. Apart from that, you should also be aware of the different types of the  interest rates charged by the banks and housing finance in a companies.

  • Floating Interest Rate: Floating  a interest rate, also known as a variable interest rate, may be a change during in the loan tenure as it is a subject to the current lending in a rates. Your EMI s will be a change with the change in interest rate. With the current trend of the  decreasing home loan interest in a  rates, it is a advisable to opt for a floating interest in a  rate.

  • Fixed Interest Rate: As the name suggests, in a fixed interest rate home loan, in the rate of the interest remains in the same throughout in the loan tenure, and thus, to your EMI s do not change. It will be help if you opt for a fixed interest rate loan when the rate of the  interest is a low, and an a upward trend is a expected in the future.

  • Hybrid Interest Rate: Hybrid interest rate or a combination interest rate is a combination of the floating and fixed interest in a  rates. Many lenders offer a fixed interest rate for a certain period, which then can be a switched to a fixed interest rate. This type of  the interest rate could be a wise option when you get a home loan at a lower interest rate, which is a anticipated to go up after a certain period, but you plan to repay the loan before in the floating rate starts.

2. Loan Amount:

Your loan amount impacts a several things in the home loan. The rate of the  interest generally differs for the loan amount up to the 30 lakhs, above a 30 lakhs and up to the 75 lakhs, and above a 75 lakhs. Since a home loan is a long-term commitment, it is a advisable to the opt for a loan amount that you will be able to repay comfortably for a long time. Instead of the  opting for a loan amount that you are eligible for, you should avail only what you can be a afford to the repay without a any delay or a defaults as it can be a negatively impact to your credit score and future loan eligibility.

3. Loan Tenure:

Home loans are generally availed for a longer loan tenure of up to 30 years, depending upon to your eligibility. The longer loan tenure helps you lower in the monthly repayments but ultimately are increases to your total interest outgo. Whereas choosing a shorter loan tenure can be create a burden of the huge EMI s. Hence, it is a advisable to choose the right loan tenure to make your monthly repayments smoother and save you from paying huge interest. In case your property is under construction, your loan will be a sanctioned in a stages based on your installment schedule with the developer. In such a case, you are required to pay only the interest amount, called the per-EMI interest. But, if you wish to the start repaying in the principal, you can start a paying in the per-EMI s.

4. Down Payment:

Suppose to you applied for a home loan of the Rs 70 lakhs, and the bank approves it for a Rs 50 lakhs based on your eligibility. In this case, you will be have to pay Rs 20 lakhs from your pocket. This amount that you pay on your own is called a down payment. You should make as much down payment as you can without stressing to your budget, as it will be help you lower the loan amount. The lower in the loan amount, the lower the interest you will be pay. Many banks offer a 100% loan amount of the property value, based on your eligibility. However, to the  avoid paying huge interest and the ensure a comfortable repayment, you should make at the least a 10% to 20% down a payment.

5. Processing Fee:

The lender charges you a processing fee to the  process to your loan application. The amount of the processing fee depends on the loan amount as most banks and housing finance companies charge processing fee as a fixed percentage of the loan amount. The processing fee for a home loan is a generally between 0.5% to 1% of the loan amount. However, some lenders offer a flat processing fee irrespective of the loan amount. Since in the home loan amounts are usually high, even a small difference in the percentage can be make a considerable difference.

6. Pr-Payment Charges:

Since a buying a home is a big financial decision for a most people, many of them are emotionally sensitive about owning a debt-free home. Hence, they are prefer to the  repay it as soon as a possible to the reduce in their debt burden. Pr-payments can be either be part-payments where you make a lump sum payment towards in the principal amount or a foreclosure where you repay in the entire loan amount before the completion of the loan tenure. By a making part-payments whenever in a  possible, you will be  able to save a substantial amount on a interest and become debt-free earlier. Most banks and housing finance companies do not charge with a per-payment and foreclosure charges after a certain period or a after a certain percentage of the loan is a cleared. However, some lenders charge you a certain amount for a making per-payments and have a limitations on the number of times you can make a per-payments and the per-payment amount. Hence, before availing of a loan, you should get a complete idea about the per-payment charges and choose a lender that allows a per-payments with a zero to the  minimum charges.


7. Pr-Approved Home Loan:

If you have not yet a finalized to your property, getting to your home loan per-approved before finalizing in the property is a advisable. Having a per-approved home loan will be give you a clear idea of your loan budget and help you negotiate with the developers better. It will be also make the loan process quick and the easy. Lenders mostly have a tie-ups with a several developers. So, by a asking for a list of the approved developers in your preferred area, you can find the best properties at the best deals.

8. Documentation:

The financial institution will be ask for a certain documentation for a both per-approved home loans and regular home loans. These documents can be a categorized as a KYC documents, income documents, and the  property documents. However, in the first thing that the lender checks is your credit score. Before a applying for a loan, it would help if you check to your credit score and make sure you have an a above-average credit score. This will be help you with the speedy loan are approval.

  • KYC Documents: These are your identity and address in a  proofs. So, the banks and housing finance companies typically ask for your PAN Card, ADHARA Card, Passport, Driving License, Voter ID, etc.

  • Income Documents: Income documents will be a vary for a salaried individuals and business persons. So, the lender will be ask for your last 3 months' salary slips, banks statements, income tax returns, computation of the income for the last three years, etc. based on your occupation.

  • Property Documents: The lender performs due to  diligence on the property before a approving in the loan. Hence, you need to submit the agreement to sell the title deeds, etc., to the lender.

9. Home Loan Insurance:

Home loan insurance or a loan cover term assurance is a type of the  insurance plan that are provides financial protection to your family in case of your unfortunate demise. In an a unfortunate event, the insurance company will be a repay the outstanding loan amount for which the insurance cover is a purchased. This ensures to your family would not have to take a financial burden of the unpaid dues. Many banks and the  housing finance companies insist on buying a loan cover term assurance plan to the avoid a any defaults in a case of an a unfortunate event.

10. Inability to Repay:

Before taking a home loan, you should anticipate to your future financial condition as not being able to the repay the home loan installments or a defaulting on the loan can be a negatively impact to your credit score. Besides, if you repeatedly miss the monthly installments, the lender can take a legal action and sell your property to recover the dues. Therefore, if you are facing a cash crunch, it is advisable to the talk to the lender and try to the  negotiate on the loan terms. If you are an a old customer of the lender with a good credit history, in the lender might consider to your request.

To Conclude:

Since a buying a home is a big financial and emotional decision, you should consider all the above mentioned factors and choose in the right type of the loan and the right amount that will be not burden you later. Moreover, it is a advisable to do thorough research online before choosing a lender. You might find better offers on a interest rates and other fees by a doing a quick google search. But, make a sure you speak to your primary banker as well, as they can be offer you the best deals and service.


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