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Finance

Important things to check before taking a home loan

Home loans are a great way to fulfil your dream of having your own home. But getting a home loan is not as easy as it appears, as there is a lot 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 is quite difficult 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;

  1. The legality of the property – When you have selected on the property you wish to buy, do give a thorough check of its legality like; the credentials of the builder, his delivery track record, documentation, and his RERA profile on RERA website.
  2. Check on associated fee and charges with the loan – Nearly all banks and financial institution levy different associated fee and charges 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.
  3. 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 tenure of the loan to increase or reduce your EMI amount depending on the availability of funds.
  4. 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.
  5. Eligibility – Do check your eligibility for the home loan. Banks consider your salary after deduction of monthly expenses, stability of your income, your age, your credit history and your assets and liabilities before approving the home loan. You can easily check your eligibility online through various eligibility calculators available online.
  6. 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 a period of 5 – 10 years or throughout the tenure of the home loan. Floating rate of interest means that the interest rate is increase or decrease depending upon RBI norms, government policies and market conditions. Opt for fixed rate of interest if you feel it is on the lower side.
  7. Tenure of the Loan – Longer loan tenure simply translates into costlier loan as you pay more interest than your principal amount.
  8. Insure your Home loanAfter 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.
  9. 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.
  10. Do 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.

 

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