A Must Read For Home Loan Borrowers
Home Loan is not a one-time decision; do review the market periodically before availing one
. Today there are unlimited numbers of home loan banks in the country wanting to give out Home loans. Given this scenario, it may seem easy getting yourself a loan. But is it really??
Buyers tend to make mistakes while entering into deals, which may not be beneficial for them, so better compare all the variables before signing a housing loan agreement by different banks. You can also Apply Home Loan even before you select your property. The loan amount would be sanctioned or approved for you, based on your repayment capability
Unique Features of house loan:
Purpose: For purchase of house from builder / resale and construction / extension of existing house.
Loan amount: You can avail for Home loans ranging from Rs.2 lac to Rs.200 lac depending on your eligibility, income and repayment capacity.
Security: Home loan is a secured loan wherein collateral are required.
Loan tenor: The maximum loan tenure is 20 years.
So if you are planning to avail a home loan, here are some tips:
Firstly, take your own time and evaluate your expenses and do a market survey about the property buying process.
Eligibility
Banks determine your eligibility based on your repayment capacity and discuss about the loan amount up front. The eligibility for acquiring a home loan is augmented by clubbing income of your father/spouse/mother/son, by clearing your outstanding debts, by stretching your loan tenure, Secondly, Do your own analysis and check the impact of your repayment of home loan on your monthly expenditure.
Interest rates best suited
An important factor that goes into your EMI calculations is the interest rates, which may vary from bank to bank, so do compare them.
Thirdly, if two banks give you the same amount of loan but at different interest rates do your math and work out what's best for you.
Fixed interest Home loans charge an interest, which remains the same through out the tenure of the loan. This means that the consumer is immune to market risk or the possible upward movement in the interest rates..
As for floating rate Home Loan, a consumer is exposed to market risk and his gain or loss depends on the interest rate condition prevailing in the market.
Fourthly, if you decide to opt for a fixed rate loan, you can still switch to a floating rate loan in the future and vice versa as and when rates go in your favour.
Insurance cover (an added cost) Also, many banks may insist on getting your home insured to safeguard their interest. Apart from getting the mandatory ones you should try to get insurance as per your circumstances.
Other costs The interest rates and EMIs are not the only cost factor. A 1% administration fee and a 1% processing fee on a Rs.10 lac loan, would amount to Rs.20,000.
Processing fees, administration fees, valuation fee, legal fee, is to be paid when you apply for a loan and other fees paid at closing. Many of these fees are negotiable. You should ask for zero processing fees and zero-penalty for pre-payment option.
Document required Most importantly, all deals and offers agreed upon are supported by relevant papers. So make sure you always ask for a letter on the banks letterhead mentioning the likes of, exact rate of interest, processing fees, pre-payment charges along with interest-schedule.
Before signing the documents, make sure you recheck all terms and conditions.
Do not sign any blank documents.
Penalties Once you have received the Home Loan amount, do your best to pay it back as quickly as possible. But this early payment might invite a pre-payment clause.
by: jacksup
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