Choosing a home loan can be a daunting task, if you are not aware of the basic home loan concepts. If you are hunting for the best home loan offer, you must keep certain important factors in mind so that you never find yourself chained to debt.
Taking a home loan is a crucial financial decision in an individual’s life. Property prices in India are going up at a breakneck speed, thus making it difficult for prospective homebuyers to afford their dream home based on their savings. The ever-increasing real estate price compels people to apply for home loans so that they can purchase their dream home using the borrowed money.
There are countless tempting home loan products available in the market today. Thus, it is important to be aware of the best home loans in India as choosing the wrong home loan deal can prove disastrous in the long run.
Key factors to consider before applying for a home loan:
- Choose Your Lender Wisely: In order to pick the right housing loan scheme, do a bit of research on the best home loan providers available in the market. You should consult more than one lender as this will help you evaluate your loan requirements, compare the interest rates, and help you identify which lender will be suitable for your specific needs.
- Calculate Loan Eligibility: Before applying for a housing loan, make sure you calculate your home loan eligibility as it will help you assess your repayment capacity. You can determine your loan eligibility by using an online EMI calculator to calculate the maximum monthly instalments that you are required to pay per month towards your home loan.
- Floating or Fixed Interest: Based on the rate of interest, there are two types of housing loans— Fixed-rate interest & Floating rate interest. The interest on a fixed-rate loan remains constant irrespective of market dynamics whereas interest rate on floating rate loan keeps fluctuating as per market conditions. It is advisable to opt for floating rate interest if the rate of interest is likely to go down in near future.
- Know Your CIBIL Score: Before approving a loan, banks and NFBCs check your CIBIL score to find out your creditworthiness. To get a home loan approval at a better interest rate, it is imperative to have a CIBIL score of 750 points and above. Having a low CIBIL score can prevent you from obtaining a home loan or you may be asked to pay a higher rate of interest.
- Know the Foreclosure Norms: Since the RBI has banned foreclosure and prepayment charges, if you notice your lender levying these charges, you should discuss the same with your lender so that you do not end up paying anything extra.
- Read the Loan Agreement Carefully: Before signing the loan agreement, it is important to read all the documents carefully to understand all the terms and conditions of the loan laid down by the lender. Which includes the loan approval process, interest rates, legal charges, foreclosure clauses, loan processing fees, loan repayment options, service tax, loan transfer charges, pre-closure charges, and other costs which you are required to pay to your lender.
These guidelines will help you choose the best home loans in India. When you apply for a housing loan, make sure you do your homework properly so as to avoid getting ripped off financially and to ensure a peaceful and hassle-free debt repayment.