Home loans are a great way to fulfill your dream of having your own home. But getting a home loan is not as easy as it appears, as there is a lot of documentation, verification, and eligibility criteria that the banks and financial institutions look at before approving the home loan. Moreover, with nearly all banks and financial institutions offering home loans, it isn’t easy to zero in on the most suitable home loan provider.
Here are a few crucial points that you need to consider before taking a home loan;
- When you have selected the property you wish to buy, the legality of the property gives a thorough check of its legalities, like the builder’s credentials, delivery track record, documentation, and RERA profile on the RERA website.
- Check on associated charges with the loan – Nearly all banks and financial institutions levy different associated fees and processing charges on the home loan. You should select a home loan that has a reasonable processing charge like Indiabulls home loan and DHFL home loan, among others.
- EMI Affordability – Many a time borrowers, overestimate their capability in paying the EMI. It is advisable to look at a home loan to income ratio of 20% to 30%. You can always make changes in the loan tenure to increase or reduce your EMI amount depending on the availability of funds.
- Down Payment – A bank does not provide 100% of the home loan, and the borrower is expected to shell out 20 to 25% of the chosen property. So you should have adequate funds available before you opt for a home loan.
- Eligibility – Do check your eligibility for the home loan. Banks consider your salary after deduction of monthly expenses, stability of your income, age, credit history, and assets and liabilities before approving the home loan. You can easily check your eligibility online through various eligibility calculators available.
- Types of Interest – There are two types of interest rates – fixed rate and floating rate, based on which your EMI is calculated. Selecting between the two can be very confusing. Fixed-rate of interest means that the interest will stay constant for 5 – 10 years or throughout the home loan tenure. Floating the interest rate means that the interest rate increases or decreases depending upon RBI norms, government policies, and market conditions. Opt for a fixed rate of interest if you feel it is on the lower side.
- Tenure of the Loan – Longer loan tenure translates into a costlier loan as you pay more interest than your principal amount.
- Ensure your Home loan – After you have had your loan amount disbursed, get home loan insurance. In case of any unfortunate event, the home insurance will pay for your home loan, and your family can still stay in the property.
- Balance of Loan transfer – You can always switch your home loan lender at any time if you feel you can get a better deal than your current home loan. Do check with your loan lender with its transfer policies.
- Compare – There are plenty of home loans available like Indiabulls home loan, DHFL home loan, ICICI home loan, etc. So choose wisely for attractive interest rates.