All About Home Loans

With the economy slowly recovering after the pandemic, the real estate sector is also getting back to its feet. People have started investing in homes and properties for themselves by availing of home loans. However, since taking a home loan is a huge financial burden, you must make a well informed choice. 

Things to Remember About Home Loan

Before you apply for a home loan, keep the below-mentioned points in mind.

  1. Research is Must – Use a online home loan EMI calculator to research and find the lender offering the lowest interest rates. Even saving 0.25% on a loan EMI can mean a lot in the long run.
  2. Down Payment – The more down payment you can make, the lesser loan you will need to avail of and thus, lower will be your EMIs. This way, you can save funds for future use.
  3. Fixed or Floating Rates: Which is Better? – Home loans are offered at floating or fixed interest rates. The floating interest rates are usually lower but move with the market rate. This can affect the home loan EMIs. However, the fixed rate is always higher. 
  4. CIBIL/Credit Score is Important– Apart from other home loan eligibility criteria, a 750+ CIBIL or credit score is a must for your home loan application to be accepted and processed quickly.
  5. Maintain FOIR Below 40% – Keep your Fixed Obligation to Income Ratio (FOIR) below 40% by closing off other small loans and EMIs. Banks calculate FOIR based on your monthly income, spending, and the potential EMIs of the prospective loan. A good FOIR increases your credibility.
  6. Advantage of Joint Home Loans –A joint home loan with a spouse considerably enhances your home loan eligibility criteria. It not only increases your home loan eligibility but also lessens the repayment burden while offering tax benefits to both. 
  7. Documents for Home Loan – Keep all KYC, property, and income documents ready to avoid all last-minute hassles. If you do not know the required documents, then you can visit the lender’s website to know same.
  8. Other Charges – Before applying for a loan, you must know that lenders charge a processing fee for the loan application. Also, there may be other charges, such as pre-closure charges and others, in case of early loan closure.

Summing Up

Availing of a home loan is a big decision, so make sure you are up for it before diving into one. Talk to your lender/bank and know all about the home loan so that you are ready and prepared for this huge financial responsibility.

Also Read: Are you eligible for a housing loan?

Advertisement

2 comments

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s