Summary – Ready to buy your dream home? You must consider some vital Home Loan factors before you complete a deal. Do nothing, explore more as you continue reading!
Congratulations on your decision to buy your dream home! Buying a home is a big decision, and with property prices surging new heights often, the decision should be ‘once in a lifetime’ one.
As a result, availing a house loan is mandatory to make the most of your choice.
But, the task remains to find the right Home Loan suiting your requirements. To make the process smooth for you, let’s provide ten factors that you must consider while applying for a Home Loan.
- Do your Research – While most of the people rely on the Home Loan agent advice, it would be a good option to also do some market research on your own. For anyone in need of a housing loan, it is important to have some knowledge about the housing loan process that follows. You can begin by searching for the best options available in the market.
- Always Check the Rate of interest – When it comes to the Home Loan interest rate, the lower, the better! They are most likely to be as low as 8.35% recently which paves the way for low-cost housing. If a lender is offering you a higher interest rate, you must not fall prey to other extra features that they might have to offer to cover their exorbitant interest rate.
- Know your Home Loan eligibility – You should always know the fact that your entire eligibility depends on your loan repayment capacity. So, it’s rational to go for a Home Loan amount that you would be able to repay with ease. You can always calculate the eligibility amount by using the Home Loan eligibility calculator which most of the reputed lenders offer online for the prospective borrowers.
- Documents Checklist – Although it is customary for the loan application form to provide a checklist of all the essential documents which you need to attach, address and an identity proof are also a must. Though most of the lenders have a similar documents checklist, you should also check with your prospective lenders to know the final list to keep it handy.
- Sanctioning – A creditor approves a Home Loan applicant’s plea on the basis of his/her documents, net monthly income and of course the credit history. An applicant then receives a loan sanction letter enlisting the total loan amount, Home Loan interest rate and the repayment tenure.
- Loan Disbursement – As soon as the Home Loan applicant finalizes a property, Home Loan application and approval received, the lender will provide an offer letter which the borrower needs to sign. What’s more, you may also opt for a lower money share when you submit the offer letter.
- EMI Affordability – From a buyer’s point of view, EMI is the main aspect that impacts a Home Loan. EMI is the total monthly outflow that dedicates towards your loan repayment. The golden rule – Never let an EMI exceed around 40-45% of your total monthly income. Most of the lenders offer free Home Loan EMI calculator on their website for borrowers to understand how much they will have to pay monthly.
- Tax Benefits on a Home Loan – As you read this, many people are taking Home Loan to buy their dream home, but only a few are aware of the Home Loan tax benefit. As per the section 80C of the Income Tax Act, you can avail a largest 1, 50,000 deductions on the income, on principal repayment.
- Pradhan Mantri Awas Yojna – This scheme of the Indian Government is beneficial to middle-income groups who want to have their own home. They are eligible to avail an interest rate subsidy of 3-4%. It means that 3-4% rate of interest will be borne by the government, making it even more affordable to opt for a Home Loan.
- Prepayment And Repayment – Partial prepayment denotes to any payment made by a borrower other than the regular and ongoing EMIs. Making prepayment helps in keeping interest rate under control. The higher the tenure, the higher the interest rate and vice-versa. Repayment in EMI form starts a month after the loan disbursement.
The Bottom Line
You are now even better prepared to apply for a Home Loan as you are aware of all Home Loan aspects discussed. Give importance to each point discussed and consider consulting your Home Loan agency for more information if you still have doubt. All the best for your dream home!