Buying a house of your own is a big decision, and with the spiraling property prices, the decision could turn into a ‘once in a lifetime’ one. Thus, availing a home loan becomes mandatory to make the most of your choice.
But, the task lies in finding the correct home loan based on your needs. To make the process easier for you, we provide 10 factors you need to consider while applying for a home loan:
1) Do your Research – First of all, do the market research on your own. Besides what a home loan agent has to advise, you need to have a fair knowledge about house loan and the process that follows. Simply start by searching for the best terms available in the market.
2) Check the Interest Rates – When it comes to home loan interest rates, the lower, the better. Currently, they have fallen to 8.35%, which makes affordable housing a reality. To know more, visit Home Loan Interest Rate Page!
3) Know your home loan eligibility – Your total eligibility mainly depends on your loan repaying capacity. So, it’s sensible to avail a home loan amount that you’re able to repay on time.
You can calculate the eligibility amount by using Home Loan Eligibility Calculator.
4) Documents required for a home loan – Although the loan application form provides a checklist of necessary documents to be attached, an identity and address proof are essential documents.
Visit Document Checklist page to know more.
5) Sanctioning – The loan is sanctioned on the basis of the applicant’s credit history, documents and net monthly income. The applicant receives a sanction letter stating the loan amount, tenure and house loan interest rate.
6) Disbursement of loan – Once you have finalized the property that you want to buy, applied for a Home Loan and your Home Loan is approved, you will get an offer letter which you need to sign. You can also opt for a lower share of money while submitting the letter.
7) EMI Affordability – EMI is probably the main feature that influences home loan from a buyer’s point of view. EMI is the monthly outflow that goes towards repaying your loan. Keep it a golden rule – never let your EMI exceed 40-45 % of your net monthly income.
Check out this convenient Home Loan EMI Calculator!
8) Tax benefit on a home loan – Many people achieve their dream of owning a house of their own by taking a home loan, but not all are aware of home loan tax benefit. According to Section 80C of the Income Tax Act, you can get a maximum Rs.1,50,000 deductions from the Income, on repayment of principal.
You can save tax on home loan by using a home loan tax benefit calculator.
9) Pradhan Mantri Awas Yojana – This scheme implemented by our PM, Mr. Narendra Modi, is specifically beneficial to the middle-income groups. They are eligible to avail interest rate subsidy of 3-4 percent. This means that 3-4% interest rate will be paid by the government, making it easy for them to buy a home loan.
To know more about Pradhan Mantri Awas Yojana, visit here.
10) Prepayment and Repayment – Partial prepayment refers to any payment made by the borrower in addition to the regular EMIs. Prepayment helps in reducing the total interest as the loan tenure gets reduced. The higher the tenure, the higher would be the interest rates and vice-versa. Repayment in the form of EMI begins after a month of taking the disbursement.
To check the prepayment charges, click here!