Buying a house is a once in a lifetime decision for many of us. With the heavy fluctuations in property prices, availing a home loan becomes a solitary choice for the majority of future loan borrowers.
To make things easier for you, we have compiled a list of 10 most useful tips, which you need to consider before availing a home loan for yourself:
1) Rigorous Research
Do the market research for the home which suits your needs & fit into your budget. Have a fair knowledge about home & home loan can save your lot of money. Physical visit the under construction/finished houses, search on websites and talk to property dealers for getting best deal of the market. Don’t borrow more than you repay.
2) Compare Home Loan Interest Rates & Charges
Even 0.5% of the difference in interest rates can save your lakhs of rupees. As of now premier banks like Union Bank of India is offering home loan at 8.35%. For more information, you can submit your query here.
Never forget to compare charges of processing, foreclosure, part payment etc. It will increase your cost of acquiring home loan by 1-2%.
3) Calculate your loan eligibility
The final loan amount is completely dependent upon your income level & existing liabilities. You can use home loan eligibility calculator for to get the exact idea of your financial situation.
You will get a complete list of required documents in the application form itself. Usually, a lender will ask for a copy of Identity Proof, Residence Proof, Bank Statement/Bank Pass Book for last six months, Income proof & relevant property related documents. Prepare all these documents in advance before applying for the loan.
5) EMI Calculation
EMI is the most popular term from a borrower’s point of view probably the main feature that influences home loan. Make sure that your EMI value is not more than 40-45 % of your net monthly income. You can use Home Loan EMI Calculator to know the exact figure.
Keep the tenure as short as possible. A longer term means higher overall payments in form of interest.
6) Joint home loan
Owning a property is always considered as a smart decision, especially when the spouse is the other partner. The burden of loan is divided between two people. Moreover, if both husband & wife are earning then they can consider for the higher loan amount. But the couple has to make sure that property is registered in the name of both the party.
7) Pradhan Mantri Awas Yojana
This scheme is particularly beneficial for all middle income earning individuals. The home loan borrower is eligible for interest rate subsidy of 3% to 4%. For more details: Pradhan Mantri Awas Yojana.
8) Floating v/s Fixed Rates
Floating interest rate fluctuates with change with market conditions, while fixed interest remains will remain fixed over a period of time. Generally, fixed rate of interest rate is higher than floating one.
9) Insurance on Home Loans
If you taking a big-ticket home loan, then is advisable to have insurance. However, taking insurance with home loan is not compulsory. If your existing insurance cover is sufficient to secure from any contingency, then don’t take the insurance.
10) Financial Concepts
Useful concepts, which you should know before availing a home loan: Amortisation Chart, Post Dated Cheques, Disbursement, Pre – EMI, Pre – Approved Property, ECS, Standing Instructions, Offer/Sanction Letter, loan conversion and balance transfer of loans.
It doesn’t matter whether you are applying for a home loan, renovating your home or doing a balance transfer, you need to do comprehensive research to get the best deal. We hope that our article has resolved some of your queries. For more, keep visiting our blog section again and again.