Common Points To Ponder For Taking Home Loan

These days taking a home loan for buying a new home is very common

. In fact, it has become quite a trend.With convenient equated monthly instalments that can well be taken out from your salary, it is affordable by a large number of people who have sufficient regular, monthly income. The loan is granted by the banks if the person is eligible to avail of the loan. Meeting the eligibility criteria does not entitle you to take as much loan as possible. Home loan is granted not only for purchasing a new home but also for maintenance or repair work or for extending the home. The quantum of loan that can be granted will be based on a number of factors such as the amount of salary or business income of the person, age, profession, the project for which the loan is to be taken and a number of similar factors. Chiefly, it is salary or income of the person which determines the quantum of loan to be granted.

If the income of a person is not sufficient, the incomes of other people in the family can also be clubbed to grant the loan. In this case, the loan is given in the name of primary holder whereas the others become the guarantors. The person(s) are also required to submit income tax return photocopies for the last three years along with their bank statements and the relevant documents of the property for which the loan is to be taken.

Further, since the banks would not like to take the risk of granting the loan totally on themselves, they might require you to contribute some percent of money, say 15-20 percent, on your own. Before the loan the granted for the individual property, the valuers of the bank estimate the market value of the property and based on that valuation, the loans is granted for one-fourth of the market value of the property. It is advised that you shall take the loan only for the sum whose instalment can be paid by you easily for the tenure of the loan.

The quantum of monthly instalment at a given rate of interest would depend on the period for which the loan is taken and the total value of loan taken. The most common practice is to offer the loans for a period of 15 years. However, it can even be 20 years and, in exceptional cases, even 30 year loans are also offered. The more is the tenure of the loan, the lesser is the monthly instalment.

Pre-payment penalties are also imposed by some banks, in case you decide to retire the loan before its maturity period. This shall be inquired into before taking the loan since banks might even waive this requirement. Usually, there is one more condition from the banks that you can not repay the loan till a specified time period from the date of taking the loan. you must enquire about these conditions of the bank before applying for loan.

by: kamal bhatt

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