Buying a home has always been one of the biggest ways of investment. It is considered reliable by many and assists a person and his financial strategies in various ways throughout the future. However, the increasing prices in properties make an individual think twice before the investment. Hence, this is where home loans come to the rescue. It is the basic financial aid that is approached and highly used by homebuyers across the globe.
With home loans, you are assured with easy liquidity during financial troubles to buy the home or commercial property of your dreams. It gives you the opportunity to not worry about your current monetary status and execute your strategies to maintain financial feasibility by investing in the right properties. You should of course consider doing your part of the research and approach the bank that best suits your home loan needs.
Keep reading to understand the five essential points that should be considered when seeking home loans.
1. Interest Payments
The foremost point to consider is to compare the different financial institutions available in the market. This will allow you to avail the best and lowest interest rates on your home loan. While doing so, you must also consider carefully pick between the two popular types of interest rates available, which are:
Floating: Floating interest rates may change over time depending upon the alterations that the RBI does on its base rate as well as the market conditions.
Fixed: Fixed rates on the other hand do not tend to change, whatever may the market conditions be.
2. Repayment Tenure
The time taken by an individual to return the loan sanctioned is termed as the repayment tenure. The repayment periods in housing loans can extend to as long as 20 to 25 years, giving individuals the opportunity to divide the payment into multiple instalments. The longer the repayment tenure, the reduced EMI amounts one can enjoy but with the disadvantage of increased interest to be paid on the loan. On the other hand, shorter repayment tenures come with higher EMI amounts and lesser interest rates. You can pick the ideal home loan depending upon your budget and return value.
3. Associated Charges
Along with the interest rates that should be considered when taking a home loan, you as a borrower should also do a careful examination of other associated charges. A few of these charges include processing fees, foreclosure charges and penalties for late payment. Additionally, you must also note that foreclosure charges are applicable only on the fixed-rate type of home loans.
4. Foreclosure Norms
The foreclosure of a loan changes from time to time depending upon the changing RBI norms. Hence, this can be confusing for many as well as tricky. While you as a buyer may save a good amount of money with early repayment of loans, there can be chances to meet with banks charging a whopping amount of money for early loan closure. While RBI has barred NBFCs since 2019 from implementing foreclosure charges, there however can be other charges included for processing, service and administrative charges that banks may levy. Hence, it is important that you know beforehand the norms that a bank follows for such additional charges.
5. Home Loan Eligibility Check
Experts recommend having a good CIBIL score of more than 750 in order to be eligible for home loans with better interest rates. Today, you will come across every reputed bank making it mandatory for home loan seekers to furnish their credit score before they can apply for a loan. If you wish to check your CIBIL score, there are multiple home loan eligibility tests that you can take part in. These tests are designed to allow financial institutes to check your eligibility based on the regularity of payoffs, credit history and so on in the past.
Conclusion
Protech Group understands the importance and necessity of home loans required by people to own the home of their dreams. Hence, we try and offer key insight on investment planning and property finances to our home buyers for better knowledge and experience. To know more about our projects and services, you can visit us today at www.protechgroup.in.
