Samarth always had a dream to purchase his own house, rather own a lavish house, in which he can live with his large family. When he got stable in his job, he decided to opt for a home loan. He carefully evaluated various options those were available in the market and eventually he carried out the cost versus benefit analysis. Finally, he had chosen the most suitable option and best deal that was available to him. He bought his dream house while taking into consideration some important factors. With the help of same, he purchased the best house and he also saved some money for future.
The home is a dream of each and every person and people intend to fulfil the same because it is considered as a temple. People save their hard earned money and invest the same to purchase their own house. However, due to urbanization, the prices of the properties are increasing day by day and to support the people’s dream, the banks, Non-Banking financial companies, financial institutions etc. have to come up with a provision of housing loan or home loan.
There are various factors that are to be considered before a person applies for housing loan. The person has to carefully evaluate all the necessary aspects before opting for the home loan. Here, Finance Buddha has come up with certain factors that are to be considered while the person applies for the home loan.
- Comparative Analysis Of All The Lenders:
As stated above, there are many lenders such as banks, NBFCs, financial institutions, local lenders etc. are available in the market that extend the hands to provide the home loan to the borrowers. The person should not take any hasty decision when it comes to application of the loan. The person should carefully evaluate the deals offered by various lenders and chose the deal that is best for him. The borrower can conduct the survey of the home loan providers and go through all the necessary information provided by the home loan lenders. Once the borrower has all information, the person can conduct the cost and benefit analysis and the deal that gives maximum rate of returns should be opted.
- Loan Eligibility Criteria:
The person has to check the loan eligibility before opting for the loan. The person can check the criteria online that is available on the various websites of the loan providers. If the person falls under the eligibility criteria, then the chances for the loan to get sanctioned, gets higher. If the person does not meet such eligibility criteria, then it becomes difficult for the home loan to get sanctioned.
- Read The Terms & Conditions Carefully Before Opting For The Home Loan:
It is essential that the person should be aware about his budget. The borrower should not fall in the trap of hidden charges. It happens most of the times that the person ends up paying more loan than it is supposed to be paid. Hence, the borrower should ensure to read all the terms & conditions before applying for the home loan. If the borrower has any queries or confusion regarding any of the terms, then it is highly advisable that the person should raise the query to the respective department and get the solution of the same in order to avoid future consequences.
- Know Your Home Loan & Home Loan Lender:
The person, who is having a good credit score can easily opt for the loan and there are high chances that the loan gets approved. Hence, before applying for the home loan the person should keep a check on the credit rating and in case, if the person does not have a good credit score, than the person can improvise the credit score by paying off due installments of credit card bills, or monthly EMIs etc. Also, the rate of interest should be carefully checked. The rate of interest should be chosen in a manner that can be suitable to your budget and the person can pay off the monthly installments in a best possible manner.
- Type of Home Loan Interest:
The home loan can be offered on fixed rate as well as floating rate. The fixed rate can be higher than the floating rate of interest, but the same is relatively safer then floating rates. The fixed rate is the interest rate that remain constant for the period of 5 to 10 years and in certain cases throughout the loan tenure. The floating rate is the interest rate that can change anytime according to the RBI mandates, government policies and market conditions. The floating rate can be lucrative and attractive to the customers, but it involves a lot of risk. The person should choose the type of home loan that can be affordable to the budget. If the borrower is associated with the bank or home loan provider since long time and share a good rapport, the person can also negotiate the rate of interest in terms of home loan.
- Tenure Of The Loan:
The monthly EMIs and tenure of the loan are interrelated with each other. If the tenure of the home loan is more, then the same will reduce the monthly installment amount and if the tenure of the loan is low, then the monthly installment amount will go high. Hence, the person can carefully assess the repayment capability and accordingly chose the tenure of the loan.
- Penalties & Charges:
There are some lenders that charge penalties on prepayment or on the late monthly installment payments. The borrower has to check all such details as in how much penalty will be charged in such cases etc. in terms of planning the same. The borrower should also clarify the various charges such as processing fees, hidden charges or administrative charges in advance, so that the budget can be carefully implemented and future consequences & problems can be avoided.