Guidelines to consider before seeking a home loan
Investment in property, almost unfailingly, yields good long term returns. However, not everyone indulges in thorough research before investing in a property. In order to get the best property, one has to evaluate important aspects such as the type of property, location, amenities and the price.
Once the property buyer is clear with all these aspects, he/she should look into the sources of funds. Although it is better to save money and own a property along with saving the interest money, most of us seek loan in order to invest in a property. By seeking a home loan, you will have to pay huge interest rates and also monthly EMIs. Home loan has been accepted by maximum number of people all over the country despite the falling economy.
Points to be considered before seeking a home loan:
Assessment of home eligibility:
It is very important that a home loan seeker should calculate the eligibility before borrowing the home loan. A home loan borrower is eligible for a loan which is five times his/her annual income. In case the value of the property exceeds more the number, the loan seeker should gear himself up to pay the money from his pocket. Factors like the borrower’s age, financial liability and other factors are considered before sanctioning his/her loan. If the applicant is on the verge of retirement, the loan amount will be reduced in a way where the last EMI overlaps with the retirement of the borrower. Also the legal and regulatory requirements of the property impact the borrowing of home loan.
The amount of finance from a bank:
A home loan seeker should always keep in mind that banks never offer 100 per cent finance to the value of the property. There are various banks which offer about 80-85 per cent of the value based on the clean financial record and other financial abilities. In such cases the rest of the amount should be given by the loan seeker while investing in a property.
Other expenses:
Managing the funds is not just the expenses which are incurred by the loan seeker, there are other fees like the processing fee for the loan, the registration fee, the stamp duty and the brokerage fee should be paid. However, the banks charge a fixed amount as the processing fee is based on the amount of the loan taken. The approximate price can come up to about 8,000-10,000 or more based on the amount of loan taken. The stamp duty is about 3-7 per cent which further varies from each state.
Be wary about the cost of the home:
It is very important that the home buyer shouldn’t go by the cost of the home mentioned on the paper. Always ensure that you are well aware about the hidden costs which are based on the floor preference, the flat preference and the garden-facing or swimming pool-facing flat. Other factors like the open parking, basement parking, types of roofs, gym membership and others should also be considered. Based on all these factors one should analyse the costs of a home.
Choosing the bank:
One should carefully choose a bank by doing thorough research on the home loan rates. There are various banks which offer home loans on lower interest rates initially to attract the buyers which are later corrected with the existing market levels in future. Other banks offer the option of charging only the interest component of the EMI till the time of possession and other banks offer installments only after the borrower takes possession of the flats.
