For most of the home buyers, taking a home loan is the only option to fulfil their dream of owning a house. However, availing a home loan has become quite easier and convenient than ever before, but still, there are certain things that a borrower should keep in mind before they apply for a home loan.
- Having a complete understanding of the loan.
- Knowing the terms and conditions involved in the loan.
- Checking the home loan eligibility.
- Knowing the types of home loans available in the market.
- Getting pre-approved for the home loan.
Checking for all this is very important as taking a home loan is a long term financial commitment for which you will be paying EMIs for years till you repay the entire loan amount along with the interest. So, here are a few points that you should ask yourself before you apply for a home loan:
Do You Have Enough Funds For Down Payment?
Though you are getting funding from the bank to buy your home, still you need to make the down payment from your pocket. And as per the RBI guidelines, banks can approve a maximum of 80% of the property cost through Home Loan. So, the borrower has to pay for the remaining 20% from their pocket. And as the price of the property is skyrocketing, paying 20% of it from your own pocket is not possible for many. So, before you apply for a home loan, it is important to first analyse yourself and know whether you can afford to pay the down payment amount or not. In addition to this, other expenses like registration fees, processing fees, stamp duty, etc. are also required to be paid by you only.
Having Knowledge about Home Loan Insurance
When you take a home loan, your lender might ask you to get home loan insurance. This is true for most of the home loan lenders at the time of the loan approval. However, you can make a decision only if you have complete knowledge about it. What is home loan insurance? How does it work? Why it is important are some of the common questions to which you should have an answer to make a fair decision.
Well, no doubt having home loan insurance covers the borrower’s dependents from any financial hardship if something happens to him/her during the loan tenure. But before you conclude, it’s equally important to know the other options (insurances) which provide equivalent cover to your life and dependents when you are not there. These options include term insurance and life insurance. While comparing you need to keep both benefits and premiums in mind. So, while you apply for a home loan it’s important to add a cover to it so that it doesn’t become a burden for your loved ones.
Do you have enough funds left For Financial Emergencies?
Before you proceed further with the home loan application, as said above you need to analyse your finances for the down-payment amount. But do you know this is not enough? After you manage funds for the down payment, it is also important to have enough funds left for financial emergencies. Life is full of uncertainties and hence investing all your savings/money only at a home loan is never a wise idea.
Negotiation is Allowed
Whoever you choose as your home loan provider, do not forget that you have the right to negotiate on the home loan interest rate, loan amount and processing fees. However, banks always have an upper-hand, but still having a good CIBIL, and a low credit utilization ratio makes you eligible to negotiate with them. So, to be at that position you need to check your CIBIL before you apply for the home loan. Remember every lender wants good business and a high credit score gives you bargaining power.
Know the Estimated EMI
EMI stands for Equated Monthly Instalment and it is one of the most important things that decide your borrowing cost. This is the amount you will be paying until you repay the loan amount. So, knowing your estimated EMI will help you to analyse your affordability. You can use a home loan EMI calculator to know this. EMI calculators can be found easily on the online portals of several home loan lenders and are free of cost for use.
To make your home loan borrowing part easier- apply online for a home loan today, all you have to do is fill the application form and keep the above-mentioned points in mind before you make your final decision.