Buying your own house is everyone’s dream. To fulfill this dream, people save every penny, but many times the amount saved falls short. In such a situation, a home loan becomes the biggest support. Nowadays, many banks and NBFCs (non-banking financial companies) easily provide home loan facilities to people.
But, taking a loan from a bank or finance company is not as easy as it seems. There are many nuances in this that you have to understand carefully. Many times, people take a loan in a hurry with incomplete information and later regret it. Let us know what important things you should keep in mind while taking a home loan so that your dream of buying a house can be fulfilled without any hindrance.
Understand the nuances of home loans
To choose the best home loan for yourself, consider these points deeply.
1. Understand the interest rate
While taking a home loan, it is very important to pay attention to the interest rate first. You should understand the difference between a floating rate and a fixed rate very well. In this, your interest rate remains the same for the entire loan period. This is better for those who want stability in a monthly installment (EMI).
In this, the interest rate keeps changing with the fluctuations in the market. If the rates fall, your EMI may also decrease, but if the rates increase, your EMI will increase. Along with this, you should also get complete information about processing fees, foreclosure charges, and other charges in advance.
While taking a home loan, do not suffer a loss of interest in the pursuit of low EMI. Often, the lower the EMI you keep, the more interest you have to pay overall. Therefore, take special care of this. Decide the EMI only after looking at all your monthly expenses, so that there is no financial problem in the future.
2. Find out the loan amount
While taking a home loan, it is very important to know what percentage of the total value of your property the bank will give as a loan. In most cases, it ranges from 75% to 90%. For example, if the value of a property is ₹ 50 lakh, then you can get a maximum loan of up to ₹ 40 lakh. The remaining amount, i.e., the down payment, you will have to pay from your pocket. If the loan amount is less than what you need, it can be difficult. Therefore, understand the difference between your total requirement and the maximum amount offered by the bank beforehand.
3. How to increase the loan amount
If you need a higher loan amount than what you need, there are a few ways you can increase it. You can include your spouse as a co-applicant. This increases your joint income, which makes the bank feel comfortable giving you a higher loan. Also, make sure that your income is sufficient as per the bank’s standards. If you already have other loans, try to reduce them.
4. Check your eligibility
It is very important to check your eligibility before applying for a home loan. You can use a housing loan calculator to know your eligibility. This will tell you how much loan you can get based on your income, age, credit score, and other financial factors. Make sure to check your CIBIL score as well. A good CIBIL score (above 750) helps you get better interest rates and increases your chances of loan approval.
5. Understand the documents and process
The home loan process requires several documents and steps. Make a list of income proof, ID proof, address proof, property papers, etc. in advance and keep them ready. Understand the entire process from the bank officer, from the loan application to approval and disbursal. Know how long it may take so that you can plan accordingly.