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. Housing loan in India has 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 jumping in to get one, the buyers should have a thorough knowledge about every aspect for Home Loans. Here are a few important Home Loan eligibility factors that a first-time buyer should keep in mind to qualify:
- Choice of Bank– Choosing the Home Loan provider is of utmost importance as one has to go in for a long-term relationship with them. Buyers should compare the not only the interest rates of different banks but also look into 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 by 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– Home Loan Rates in India is something every borrower should look into carefully before loan procurement. One can either opt for a floating or a fixed Home Loan rates, each having its own pros and cons. A fixed rate is more advantageous in case there is a hike in interest rate as this leads to a 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. Also, a common myth about fixed rate is that it remains constant throughout the tenure of the loan but in reality, it generally remains constant for only 3-5 years.
- 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 an 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 prepayment 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.