Home loans

For those who are about to secure a home loan, some precautions should be observed. Sans doubt, home loans are the perfect sources of arranging funds in a legal manner and seeking a property or realty unit can easily become a cakewalk. Albeit, the banks or the NBFCs seem extremely keen on giving away loans but still, getting it eventually sanctioned and reimbursed is a lengthy task. But, like any other financial product, to shun the future shocks, a few significant tips would be useful while exploring for home loans. Some of the important tips to be considered while seeking a home loan are mentioned below:

Type of loan:

Banks have 2 types of home loans, and are differentiated on the rate of interest – fixed and floating.
In case of home loan with a fixed rate of interest, the interest rate does not get affected by the market fluctuations. But on the other hand, the floating rate of interest is largely determined by the market conditions and expert say that the interest rate is around 1 to 2.50 percent higher than the other version. Such rates are also likely to get lower with the market rates and then can also rise with them.

Eligibility and determinants that affect it:

1. Salary:

 It is a vital factor while EMIs are determined and it is estimated that the installant amount are generally calculated which are around 50-80% of the borrower’s salary (base salary and the dearness allowance. However, eligibility is likely to diminish further is there are some additional liabilities.

2. Dependents Per Borrower: 

scores of banks also take into consideration the number of dependents that a borrower has to look after.

3. Your job Profile:

 salaried people are more preferred for a swift home loan while the self-employed are mostly looked down upon as the latter witness fluctuating earnings.

4. Age:

The years aspect too is vital while the tenure of loan is determined, since obviously a person’s  re-payment capacity is directly linked to the number of potential earning years he would have. Generally, tenures of loans are not stretched beyond one’s retirement age, unless there is a younger co-applicant. Besides, if the income of the co-borrower is also affected, the main applicant will have to bear a higher loan amount.

Seek Expert Advice:

It is generally found that a home loan agreement is often beyond comprehension for a common man, but still, since it is a legal document, every point must be made clear while entering in such long term relationship with the banks. It is also worth wondering that a lot of loopholes are often concealed within some details. For instance, the term “default” may be considered as a part of EMI which is exempted, but many banks opine that defaults refer to the scenario when the borrower expires or if a divorce occurs between joint applicants and so forth. Hence, always seek the advice of experts while seeking the home loan.
Finally, in a nutshell, the following are the points which should be considered while considering a home loan:

• Rates of Interests,
• Lenders that offer separate amounts exclusively for home improvement
• An option for refinancing, wherein you can avail a loan up to the registered value of your property
• Part-prepayment facility which allows you to prepay at no extra charge
• Foreclose option, wherein loan can be paid in full without any additional charge and during the tenor
• Flexibility during repayment options

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