Buying a home is not a joke in today’s date and time. It involves hefty financial transactions. And usually one doesn’t have the requisite cash in hand for getting a home loan. In such cases, home loans come to rescue and provide you with the desired money required to buy your dream home. But home loan approval and application is bounded by several things and the borrower must be aware of them. Some of these include interest rate, credit score, documentation, eligibility, additional charges and fees etc. Getting a home is one big financial decision and it is thus very important that you choose the best home loan lender with the best offerings. Here are some of the things which you should keep in mind before taking a home loan.
Every lender before providing the loan considers the credit score of the borrower. The credit score is the direct reflection of one’s creditworthiness. The home loan applicants must strive to maintain a good credit score for quick and fast loan approval. A credit score over 750 is desirable to avail a home loan. Also, it gives you the negotiating power to get a better interest rate deal. Try to maintain and improve your credit score by making timely payments of bills and existing loans without delays and defaults.
Interest rate plays a crucial role when taking a home loan. Different lenders offer different rate of interests on the home loan. Apply for home loans in India through the LoansJagat portal which lets you compare different lenders for their offerings in terms of interest rate, loan amount, loan tenure etc.
There are two types of interest rates viz. Floating and fixed. Fixed-rate of interest comes with a fixed EMI which remains constant through the loan tenure. Floating interest rate, however, is calculated based on the MCLR and tends to change with time. It is advisable to opt for a floating rate of interest as it allows you to save on some money which you would otherwise pay as interest.
3.Home Loan Tenure
Before taking a home loan, be sure of the home loan tenure. On account of the same, your EMI will be decided. Banks and lenders prefer the borrowers who opt for shorter home loan tenure. Though it increases your monthly instalments but decreases your home loan interest rate burden on the instalments thereby reducing the overall cost of the home loan.
All banks and lenders charge a processing fee which is usually up to 1% from the borrowers. Look for the lenders which charge minimal processing charges. If you have a good relationship with the bank, you can also negotiate to waive it off.
5.Equated Monthly Instalments
Equated Monthly Instalments (EMIs) are your monthly repayments as per the home loan repayments schedule. It is decided on account of the down payment, rate of interest and loan tenure. Higher down payment results in smaller EMIs. It is advisable to use the home loan EMI calculator before taking the home loan to know the amount you will be liable to pay. Make sure that your home loan monthly instalment doesn’t exceed 45% of your total income.
6.Home Loan Documents
Abreast yourself with all the terms and conditions regarding the home loan before binding yourself into the contract with the lender. Clear all your doubts and get to know about all the different fees and charges which are mentioned in the home loan document.
Usually, the borrower has to pay 10-15% of the total home loan amount as the down payment. The remaining home loan amount is paid on a monthly basis as per pre-decided EMIs. Try to go for a higher down payment so that your EMIs are reduced and you save on the interest.
Some lenders may have some additional charges which they usually disclose at the end of the application process. Get all the details clear beforehand to avoid any last-minute hassles.
As per the recent RBI guidelines, no lender can charge any pre-payment penalty in case the borrower wishes to repay some loan amount in surplus.
Foreclosure of home loan means finishing the loan by repaying the outstanding dues before the end of the home loan tenure. It is beneficial for the borrower as they save on some considerable interest. Different lenders have different foreclosure penalty. Opting for the floating interest rate for a home loan saves you of the foreclosure penalty.
The points mentioned above can sail you through the home loan application journey seamlessly. Home loan for salaried are available by various lenders, thus it is advisable to compare different lenders on the LoansJagat platform to choose the best loan product.