Owning a home is a dream for every person but the huge cost involved in it makes it impossible for most people to turn it into reality. Home Loans have however helped in making this dream come true for a number of people. Home Loans may some like a lucrative deal but it comes with huge long term responsibilities. So before you apply for Home Loan the buyers should have a thorough knowledge about every aspect for Home Loans. Here are a few Home Loan eligibility factors that a first time buyer should keep in mind:
● Choice of Bank- Choosing the collect lender is of utmost importance as one has to go in for a long term relation with them. Buyers should compare the not only the interest rates of different banks but also look in to the other features like past base rate trends, customer services provided by the bank, processing fee charged etc. One can easily compare the pros and cons of the lenders online these making it a hassle free process for borrowers.
● Estimation of Loan EMI- Before opting for a Home Loan one should always get an idea as to what amount he/she needs to pay per month. It is beyond a person’s reach to take a loan on a new home without the adequate income. Pre-calculation of the EMI would not only give you the budget that you can spend on for your new home but also makes it easy for the borrower to get the loan sanctioned from the bank. Also it is not necessary that one should opt for lower EMIs for a longer tenure. If they are financially stable one can easily opt for a larger EMI can repay the loan quicker.
● Interest Rate- This is one criterion every borrower should look into carefully before loan procurement. One can either opt for a floating rate or a fixed rate Home Loan, each having its own pros and cons. Fixed rate is more advantageous in case there is a hike in interest rate as this leads to continuation of EMI payments at the old lower rate. Floating rate on the other hand tends to be beneficial when the interest rates lower down during fluctuation. One is always looking for the lowest Home Loan rates for reduced repayment amount.
● Loan Tenure- The duration for Home Loans tend to vary between 15-20 years. It depends on the EMI that the borrower is willing to pay. In case of lower EMI the tenure increases which leads to increase in the loan amount to be repaid due to larger interest costs. One can easily opt for shorter tenures with higher EMI if their financial condition permits.
● Down Payments- One can opt for as low as 5% of the property cost as down payment. There is no bar to the maximum amount one wants to pay as down payment to the seller. The more amount one pays as down payment lower is the loan amount thus making it much easier for the borrower to get the loan sanctioned.
● Various Charges Applicable- Processing fee constitutes about 0.5-1% of the loan amount. Also other charges like pre-payment charges, late payment fee, CERSAI charges, and switching fee may apply. One should go through the terms and conditions of the bank before applying for the loan to make sure that no hidden costs are involved. Some of the best Home Loan offers can be scanned through online for each bank.