Buying your own house is probably one of the biggest assets of your life. Additionally, it has a lot of emotional values related to. Purchasing a house is not as easy as buying apples, it costs a Fortune. For the sake of other pillars of financial well-being such as building emergency funds, retirement planning, buying a car, children’s education many are not able to fulfil their dream of owning a home. But, thanks to the Home Loans which have helped millions of people to turn their dream into reality. However, rushing for a home loan just to fulfil your dreams is not advised. The most important thing before you think of availing a home loan is you should plan your finances, keeping all your short and long-term goals in mind. After all this analysis and planning, go for a home loan only if you think you can afford it. And once you have decided that you will be taking a home loan, your hunt for the best deal starts. You need to look for the right Home Loan product from the right lender, without compromise on your requirements. So, before you start, you need to know a few things which will make you get the right Home Loan. Here are the things which you should look for before buying a Home.
Research work
You can’t rely on a single thing which is in front of you. You need to research through all the available in terms to get the best deal for yourself. Well, the online availability of loans has made things easier for you. You just need to visit the online portals of different lenders and compare their home loan offerings in terms of interest rate, processing fees and terms for the loan. And select one which you think is best for your requirements, affordability and pocket.
The Credit Score
A good Credit Score can help you grab the best deal on your Home Loan. A score of 750+ is considered good and helps to get a loan not only at cheaper rates but also increases your eligibility. So, once you decide that you are taking a home loan, it’s important for you to enquire about your CIBIL score. And if your score is good you can apply for the home loan, if not you have to wait for some time and work to improve your score and then apply for the home loan. Doing this will not only increase your chances of home loan approval but will also help you get a good deal for your loan.
Penalties
Before you sign your loan agreement or choose a particular Home Loan provider, it is important for you to understand the foreclosure norms and penalties charged in case of delayed payment.
A home loan is a long term loan that goes around 20 to 30 years, hence you should also consider the future where you are likely to get a promotion or a bonus. In brief, with your rising income, you may consider closing your home loan. So, you need to know the norms for the pre-closure, pre-payment and part payment too. Know the lock-in period and payment delayed penalties too.
Fixed vs floating
Before you finalize your lender, you need to know the difference between fixed and floating rates of interest so that you can and select the one that suits you.
Fixed-rate of interest: As the name suggests, when you opt for a fixed rate of interest, your EMI remains the same till the time you pay the last EMI. This remains unchanged and unaffected with market fluctuations. This can act in favour of you if the market rates go high and can be vice versa when the market is low. Since it’s fixed and you can’t change it and you need to pay more only as you can’t do anything about it.
Floating interest rate: If you opt for it, the interest rate for your home loan gets directly affected by the market fluctuations. With the market rates climbing up, the interest rate on your loan rises as well and vice versa. Since home loans are longer tenure loans hence you need to be extra careful with the type of interest rate you choose for.
Processing fee
The processing and taxes cannot be exempted from your total borrowing cost. So, it’s important to compare lenders for these too. A home loan is a big commitment and even 1 or 2% or it is a huge amount. So, it’s better to enquire well before finalizing one.
Read the fine print
You can’t afford to miss even a minor detail that could affect your finances later. You need to know the exact details of your loan and for that, you must read the fine print carefully. In case you are not able to understand it, you can take the help of the experts. As it’s better to be safe than sorry. Not knowing the norms can lead to major financial obligations later, so it’s better to give time and understand it better before you sign it!
In a Nutshell:
Before you apply for the Home Loan, you need to know:
- The interest rates
- The processing fees
- The included taxes
- The pre-payment charges/part payment/ pre-closure charges
- The penalties charged in case of delayed repayments
- Type of interest rate: fixed or floating
- The norms and fine prints
In case you default your EMI, Know what are the Rights of a Defaulter?
Right to have a Notice
Before starting any loan recovery process, the loan defaulter has the right to get a notice from the lending institution. When a borrower fails to pay EMIs for 90 days, the lender should send him a notice of further 60 days. If the 60 days of the notice period is over and the loan is still unsettled, then only the legal action against the loan defaulter can be initiated by the bank.
Right to be heard
During the notice period, the defaulter can reach the loan provider and can make his representation to put forth objections to the repossession notice. The bank officer must reply within 7 days with a valid reason if he rejects the application.
Right to Ensure Fair Value
In the worst case, if the bank has repossessed your property, the property value must be finalized with your consent. If you feel that your property is being undervalued by the lender, you can raise your voice. In such cases, you can object and declare a price that you feel to be reasonable. One can even look for prospective buyers and can fix a meeting with the lender if he feels that this can bring a good deal.
Right to the Balance of the Auctioned Process
A loan defaulter has a right on the balance amount of the auctioned property. If the house is sold at a higher amount than you owe to the bank, you have the right on the excess amount.
After Complete Repayment
Once you’re done repaying all the dues, you need to ask the bank for the following documents:
- No Due Certificate.
- All original documents of the asset provided as collateral for the Home Loan.
- Unused post-dated cheques.
- Letter of final settlement signed by the bank.
Following these will surely make your home loan tenure a hassle-free experience. Apply now
