Applying For A Home Loan? Don’t Forget To Consider This List
A home under one’s name is still a dream for many, and it is also the most important financial decision for mostly all. There are some things you should be cautious about when purchasing a home or investing a considerable amount of money. For people who are to buy their first home, availing a home loan can help bring their dream come true. Even though it may seem that banks are eager to lend out loans, getting a home loan sanctioned is a tedious and lengthy task.
What all points should I keep in mind while going for a home loan?
If you are pondering over taking a home loan at all, it is essential to understand each minute detail about it. A home loan is a responsibility that will run on for several years until you repay the entire loan amount. Below are listed a few things you should be considering before you plan to take a home loan.
- Eligibility criteria.
The first thing you should ensure is if you are eligible for a housing loan. Initially, the bank or lender will assess your eligibility based on your income and repayment capacity. Other vital factors include your age, qualification, financial position, number of people depending on you, spouse’s income, and job stability.
- Types of home loans.
The different types of home loans that you can avail from banks are:
- Adjustable/Floating rate loans.
In this type of loan, the lender’s External Bench Mark Lending Rate is linked to the interest rate. Therefore, if the External Bench Mark Lending Rate changes, the interest rate will also change accordingly.
- Fixed-rate loan.
At the time of taking a loan, the rate of interest is fixed. This fixed rate of interest is applicable throughout the tenure of the loan.
- Combination loans.
The combination type of loan is a combination of both the loans mentioned above. These loans are offered to the people with one part of the loan at a fixed rate of interest and the other at an adjustable or floating rate of interest.
- Home first or loan first?
Getting your home loan approved before selecting the type of house you want will help you fix the exact budget. A home-loan being approved before-hand can also keep your home search focused. You can even get suggestions from the lender regarding properties in your preferred locations. This will reduce the paperwork in the loan sanctioning process and assure you of the supreme quality of projects.
- Loan amount.
Most lenders will provide you with a loan ranging from 75 to 90% of the property’s cost, depending on the loan value. For example, if the property you are interested in is worth Rs. 50 lakh, you can avail of a maximum loan amount of Rs. 40 lakh depending on your eligibility. If you are applying with a co-applicant, his/her income will be considered, and the loan amount may increase accordingly.
- Price of your home loan.
The cost of your home is also a factor that should be taken into consideration. The loan cost will include interest payments, processing fees, administrative charges, prepayment penalties, etc. An ideal home loan should not be having any prepayment penalties for the adjustable/floating rate loans. You should ensure that there are no undisclosed charges when you are taking a home loan; as per the regulations, the lenders should have 100% transparency with their clients and disclose all information about the fees.
- EMI/ Pre-EMI.
EMI stands for Equated Monthly Installment. This is the sum you owe to the lender every month. EMI includes the repayment of the principal amount along with interest on the outstanding amount of the loan. Pre-EMI is used in the case of buildings that are under construction. The lender will disburse the loan in stages, depending on how much you need to pay the developer. 
Final Word
If you intend to take a home loan to start your new life, you should begin with knowing all the details of it. Purchasing a house is a huge step, and it is also the most satisfying moment you will experience in a lifetime. A home loan will surely help you get your dream house, and it is a convenient way to own a home.
