Investing in a home is the prime investment most people in the world care about. It is a lifetime dream for any individual. A home loan will be the biggest and most important loan an individual will ever go for in their entire life. This is the primary reason that there is a long list of banks and financial institutions which offer all types of home loans in India. People these days are choosing Home Loans for their different needs.
Hence, it's important to make the right decisions when you approach a bank for a home loan to buy your dream house. Here are some important things to watch out for says Brijesh Parnami, CEO Destimoney Advisors.
1. Do your own research
Home loans are marketed pretty aggressively by most financial institutions, luring investors with attractive interest rates and schemes. It however pays to take decisions wisely before taking the plunge. It is important to understand the terms and conditions of the loan agreement, penalties, charges etc. Do not hesitate to ask the sales person or the bank to explain or clarify even the slightest information.
2. Set your budget
The first step before embarking on a home-loan application is to decide on your budget. A standard home loan will cover upto 80% of your requirement (the overall cost of the property). You will need to raise a minimum of 20% and also separately, take into account stamp duty, registration charges, brokerage etc.
3. Know eligibility for a home loan
Loan eligibility is calculated based on your ability to pay and the cost of the house. There are a number of ways you can increase your loan eligibility. For instance you may choose longer loan tenure in return for higher eligibility. You may request the bank to club the incomes of close relatives like your spouse or parents.
4. Calculate Interest Rates and other Fees
These rates vary from institution to institution and through certain periods of time through the year when special promotional offers and discounts are in place. Beware of such banking terminology as ‘fixed rate’, ‘floating rate’ and ‘reducing balance’. Discuss these factors thoroughly before deciding on an option that suits you best.
5. Documents need to furnish
One should be aware of the requisite documents for a home loan procedure. Some of the basic documents include Photo Identity, Pan Card, Address proof, Bank Statement, Salary Slip, Form 16 etc. that one needs to submit for availing a home loan.
1. Do your own research
Home loans are marketed pretty aggressively by most financial institutions, luring investors with attractive interest rates and schemes. It however pays to take decisions wisely before taking the plunge. It is important to understand the terms and conditions of the loan agreement, penalties, charges etc. Do not hesitate to ask the sales person or the bank to explain or clarify even the slightest information.
2. Set your budget
The first step before embarking on a home-loan application is to decide on your budget. A standard home loan will cover upto 80% of your requirement (the overall cost of the property). You will need to raise a minimum of 20% and also separately, take into account stamp duty, registration charges, brokerage etc.
3. Know eligibility for a home loan
Loan eligibility is calculated based on your ability to pay and the cost of the house. There are a number of ways you can increase your loan eligibility. For instance you may choose longer loan tenure in return for higher eligibility. You may request the bank to club the incomes of close relatives like your spouse or parents.
4. Calculate Interest Rates and other Fees
These rates vary from institution to institution and through certain periods of time through the year when special promotional offers and discounts are in place. Beware of such banking terminology as ‘fixed rate’, ‘floating rate’ and ‘reducing balance’. Discuss these factors thoroughly before deciding on an option that suits you best.
5. Documents need to furnish
One should be aware of the requisite documents for a home loan procedure. Some of the basic documents include Photo Identity, Pan Card, Address proof, Bank Statement, Salary Slip, Form 16 etc. that one needs to submit for availing a home loan.
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