Buying a new house is one of the most important decisions of anybody’s life and also probably an idea that people nurture in their mind from a very young age. But it takes years of planning and years of savings to make a final decision at the right moment. Therefore, if you are looking to buy a house, you have to keep all possible points in mind and then make a decision. Investing a good amount of money is one of those points that everyone considers and if one does not have the right sum of money, they look for getting a loan. House loans are usually repaid for years and take a good part of your monthly income. Hence, you should stay extra careful while taking a loan whether you home loan apply online or go to the bank.
Here are the top 8 points that you should consider while buying a house on a home loan.
Research on loan options
Today, all information is easily available on the internet. You can make extensive research for what options are available in the market for home loans. The research should be focussed on three crucial factors, namely, EMIs, down payment and repayment tenure. These three factors will allow you to choose the most suitable home loan from the right lender at an attractive interest rate.
Aim at affordability
There are a plethora of suggestions that you can find about home loans, but among them, affordability is a large factor that you must need to consider. You should choose the fixed monthly EMI that could repay the loan amount as soon as possible without taking away the comfort from your life. Therefore, you must consider overhead expenses beyond the EMI that you will be paying each month. You should also consider maintaining an emergency fund that proves very helpful in case of an unforeseen financial emergency.
The time borrowers take to repay the loan is called repayment tenure. Also, repayment tenure and EMIs mutually affect each other. If you choose a longer tenure then the EMIs will be smaller or if you choose a shorter tenure then the EMIs will be larger. So, if you earn a stable and recurrent income and also have a strict budget, then it is advisable to choose a short loan repayment period. It will allow you to pay off your loan quickly without giving out so much of your earnings as interest.
Plan of spending
Usually, home loans are the biggest form of loan that people take. This means, their repayment is done by taking a huge part of your monthly income. It is advisable and preferable that after taking a home loan, you should live on a strict budget so that paying the monthly instalments along with your other expenses doesn’t become a burden. Therefore, while repaying a home loan, you should spend according to a plan and avoid any non-immediate purchases.
Know foreclosure norms
RBI can change its norms about loans that banks offer to their customers and these norms can prove beneficial for borrowers. Therefore, while repaying a home loan, you should be aware of all the RBI norms related to foreclosure because repaying the outstanding amount before the loan tenure might save you from paying any added expenses. Also, if you pay the loan before the tenure completion, it will improve your credit score too.
Home loan eligibility check
Before applying for a home loan, it is important to check your eligibility for it. While checking the eligibility, the documents pertaining to your credit history are very crucial. Many financial institutes that distribute home loans have made available their loan eligibility criteria over their websites. But if you still have any doubts, you can drop a query or you can visit them physically to clear doubts.
It is not only the cost of a home loan that a borrower has to bear. Every home loan also includes some other charges such as processing fees, foreclosure charges and late payment penalties. Hence, it is important to know about all the additional charges associated with a home loan before applying for it. Moreover, you also need to know that foreclosure or prepayment charges are only applicable in the case of fixed-rate home loans.
Read the documents carefully
It ensures borrowers that they are buying a loan from the right distributor and they are not going to face any problem in future.
The above-written points give a crisp knowledge about what to do and what not to do while applying for a home loan. Many banks and non0vanking financial companies offer home loans with their own interest rates and other rules. It is very important to consider and carefully evaluate the said factors so that you choose the best deal available for you.