Six things you must keep in mind before taking a home loan
Owing to fast disbursals, applying for a home loan has become easy. If you are planning to take a home loan, here are six important things to keep in mind while availing a home loan.
New Delhi: Buying a home is one of the biggest financial decision. If you are taking a home loan from a bank, you still have to arrange a huge amount to pay the downpayment. Owing to fast disbursals, applying for a home loan has become easy.
With the introduction of the Real Estate (Regulation and Development) Act, 2016 and easy monthly installments, consumer sentiment has been boosted. If you are planning to take a home loan, here are six important things to keep in mind while availing a home loan.
1. The credit score is one of the most important factor which banks consider when you apply for any loan. A good credit score of 750 or above will make you extract better interest rates on your home loan. It will also allow a quick disbursal and processing of a loan. Maintaining a good credit score is not that tough. It can be achieved by making timely payments for credit cards and loan.
2. Once you have decided to take a home loan, determine your eligibility. It can be determined by credit score, payment, history, income, age and current liabilities. You can use the eligibility calculator to understand as to how many loans you are eligible for.
3. There two types of home loans based on the interest rate- fixed and floating. Fixed rate loan is where the interest rate doesn’t change with fluctuation in the market whereas, in floating rate loan, interest rates vary according to the market conditions. If you an old customer with a long relationship with a bank, you can negotiate the loan amount and the rate.
4. Read your home loan agreement carefully. It is a legal document and often incomprehensible. Read carefully about the add-ons charges and penalties, as it is not just the interest that you pay. Apart from these, there are administrative and service charges or processing fees as well. In fact, there are penalties such as pre-payment of the loan.
5. In order to cater to the different needs of the borrowers, banks offer varied options of EMI. Your EMI depends upon the down payment you make at the time of purchasing a house. It is important to understand that the bigger the sum you pay as your down payment, the lesser is the amount being converted into EMIs.
6. If once you have taken a loan from a bank, doesn’t mean you can not switch your lender. If you are getting a better deal from another lender then you can switch your lender. Before you zero in on a loan, it is advisable to compare different loan products available in the market. In order to choose the right loan, consider EMIs, interest rates processing fees and the other related charges.