Get the Right Deal on your Home Loan
Saturday, December 2, 2017, 6:00 AM | Leave Comment
The decision of buying your own house is as much emotional as financial. Irrespective of your financial standing, the thought of your first home provokes a very special feeling. And that is why the anxiety it brings is very normal.
Most of us, think to apply for Home Loans while buying a home. Home Loans offer a certain level of financial relief and bridge the gap between your dreams and reality.
While housing loan provides us with some assurance, it’s important to understand what exactly are we looking for and how can we get the best deal for Home Loans.
Here are few things you should consider to avail the right Home Loan offer:
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Comparing loan options and perform a thorough research
A Home Loan is a long-term financial commitment. To know about the favorable Home Loan interest rates and services, you should check credentials of the prospective banks.
Compare 4-5 different lenders and rate them by the final cost of the loan, ease of repayment, ease of applying and references from past borrowers.
However, if you compare by filing many applications, it may reduce your credit rating and can affect your Home Loan approval chances.
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Eligibility for Home Loan
The factors like credit score, monthly salary as well as ongoing applications of your loan play an important role in your Home Loan eligibility criteria.
Before applying for any loan application, it is important to fix your credit report as a bad credit score has a negative impact on your loan approval.
You can improve your Home Loan eligibility by making prepayment of your outstanding loan amount.
In case your income is not sufficient for loan approval, include your family members who are self-employed, as other applicants for the procedure.
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Improving the debt to income ratio
Before applying for a housing loan, attempt to either decrease your debt or increase your income. Boost your debt to income ratio by making bigger payments on credit cards and paying outstanding loans with large interest outgo.
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Tenor and EMI
Lenders propose a maximum Home Loan tenor of 30 years. One should opt for shorter tenor as long duration may result in increased interest rates.
However as shorter tenor leads to higher EMI’s, you should choose wisely. Use a Home Loan EMI calculator to know about monthly repayments and your repayment capacity to avoid any financial crisis and complexities.
It is a great tool for Home Loans in India which can help you avail the right deal as per your requirements.
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Loan to Value ratio
The loan to value ratio is the ratio of borrowed loan amount for buying the property to the actual market value of the property. RBI sets LTV ratios.
However, they may differ as per various lenders and their procedures for risk assessment. A low LTV ratio implies high down payments,hence compare different LTV ratios.
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Type of interest rate
Lenders offer three (fixed, floating, hybrid) Home Loan interest rates for Home Loans. Fixed rates keep the EMI constant throughout, whereas floating interest rates vary as per market fluctuations.
It is advisable to choose floating rates, as they don’t attract pre-payment charges.
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Choose your Loan reset frequency
The rate of interest regime based on MCLR, asks the banks to reset the Home Loan rates of each borrower annually.
So you can opt for highest reset frequency when the interest rate is decreasing. In case you are expecting a rise in interest rate, apply for a loan which is based on yearly reset date.
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Know about processing fees and other charges
The housing loan charges include processing fees, switching fees, late-payment fees, administrative fees as well as pre-payment fees (in case of fixed interest rates).
These charges vary widely across various lenders and hence a comparison is necessary while evaluating Home Loan options.
As Home Loans reduce your financial burden, it’s important to take an informed and deliberate decision to avoid any complexities and loss associated. So brace yourself in advance and get benefits of the best Home Loan deals.
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