Top 10 tips to keep in mind while taking a home loan

There is no place like home. Buying a home is one of the biggest and important decisions in life. A right choice can help you to secure your and your family’s future.

However, every individual makes their decision carefully when it comes to taking a home loan. It is utmost important to understand all the fundamental aspects of a home loan, documents required, eligibility requirements and benefits to avoid these simple mistakes.

If you are a first-time buyer, then it is necessary to know a few crucial things before you invest your money towards buying a house for yourself.

Eligibility: Once you have decided to take a loan, the first thing you need to know is how many loans you are eligible for. The factors influencing your eligibility include your credit score and history, your income, and your current liabilities.

Rate of interest: Once you know your eligibility, all you need to check is the home loan interest rate. Before taking the loan, you should compare the interest rates with other financial banks. To understand how a home loan works, one needs to understand what interest means.

Interest is the period of the interval at which the loan amount balance is calculated. You can also calculate your home loan interest rates and even understand the factors that affect the interest rate.

Monthly EMI: EMI is one of the most critical factors that make an influence on the borrower’s mind to take a home loan decision or not. EMI is the monthly outflow of money that will go towards the repayment of your home loan. You can also check with the help of EMI calculator how much monthly EMI you would have to pay every month.

Down payment — Banks require the borrower to contribute a certain amount as down payment while buying a home. The down payment varies from one lender to another and also depends on the borrower’s credit history/income.

Type of interest rates — There are two types of interest rates available for taking home loans: fixed and floating rates.

Fixed interest rate — Fixed interest rate on home loans remains the same for the entire loan tenure irrespective of the market conditions.

Floating interest rate — If the home loan interest rate varies periodically over the loan tenure, then it is known as the floating interest rate. Marginal costs of lending rate (MCLR) are revised within a period, which leads to change in the interest payable as well.

Credit Score — A borrower’s credit score is one of the most important things to consider while checking a borrower’s home loan eligibility and interest rate. The credit score of a borrower means the creditworthiness of the person, which tends to be one of the primary determining factors for home loan approval. A good credit score is one of the most important factors for the lender to check home loan eligibility.

Processing Fee — When applying for a loan, an amount needs to be paid to the lender, which is known as processing fee. Processing fees can either be a fixed amount or a percentage of the loan amount.

Read Documents Carefully: Before endorsing in documents, kindly read everything written in the loan agreement. It is important to remain familiar with the terms and conditions.

MCLR — MCLR is introduced by Reserve Bank of India at which banks will now lend money to new borrowers. It refers to the minimum interest rate, below to which a bank does not permit.

Documents Required for Home Loan

The documents that need to be submitted may vary from one lender to the other. Some of the necessary documents to be submitted are as follows:

1. loan application form,

2. Passport size photographs,

3. Aadhaar Card,

4. Identity proof etc.

There are few financial banks which provide home loans without any worries. Some of them you can have a look Subham Housing Development and Finance, Aadhar Housing Finance, SBI, HDFC etc. Hope this article helps you to find the right home loan. Source by https://shdfchomeloans.wixsite.com/website/newsroom/top-10-tips-to-keep-in-mind-while-taking-a-home-loan