Four tips to follow before select home loans in India

Buying your first home is like stepping in the world full of excitement and happiness. It is not just about bricks and walls, but your hard work and dedication to build a nest for your loved ones. While traditional financers are always expensive options, home loans in India offered by leading banks and finance companies are some of the most preferred sources of funding in today’s time. Experts say home loans prove to be the ideal source of funding for first-time home buyers. And those who wish to take a loan should consider the interest rates applicable, charges, EMI, loan amount, etc.

Here are some tips to follow before you apply for home loans in India:

Meet the Essential

Every bank or finance company will have its own parameters which borrowers have to meet for quick loan sanction. Firstly, you have to hold a decent credit score. It indicates your overall unsecured debts are within the manageable proportions. It is one of the most important aspects. Lenders will evaluate your financial status, income source, and repaying capacity for the period of around 20-25 years. Additional income like spouse or parents’ income, property value, will make an impact on your loan eligibility.

Type of Interest rates

The interest rate is the crux of any form of a loan. It is the prime factor that would decide your loan amount and the EMIs. If you opt for lengthier tenure, you get easy and low-interest rates which make your mortgage more affordable on your wallets. They are categorized as fixed or floating interest rates – While fixed rate stays constant through the loan tenure, the floating rate is subject to market economics and lender’s policies in every financial year. Some lenders offer semi-fixed floating rates wherein the rate is fixed for the first few years and later turn’s to floating rate in nature. These rates are declared by the bank or firm each quarter based on the RBI guidelines.

Additional charge

Other than interest rates, there are other charges incurred on home loans in India such as processing fee, prepayment charge, late payment charge, cheque delay charge, etc. Also, lending firms will sanction only 80 to 85 percent of the home loan amount to buy home. So, you should be ready with the margin money of around 15-20% if you wish to apply for a loan. Make sure you have saved enough over the years to pay towards the margin money, and little extra savings will help you tide over unexpected situations like a medical emergency, job loss, or other perils. It means you’re well prepared for your loan and improves your chances of loan sanction.

Avoid any form of penalty

Lenders will welcome those borrowers who have a good repayment history. So, if you repay your loan on time everything is good, however, if you default then a penalty would be levied for defaulting on the monthly mortgage payment. It might seem 2-3 percent on the amount. But in the long run, it might be significant costs, if you miss on payments for a couple of times. An ideal way is to set up an ECS near to your salary date so that a dedicated chunk goes towards home loan repayment.

Compare online & apply

Aggregate sites are the best tool to compare quotes of some of the top banks and non-banking financial companies in India. They offer competitive interest rate, higher loan eligibility, and a longer tenure for comfortable loan repayments. In this internet era, you don’t have to visit pillar to posts to fill up forms, submission, and wait for a month to know your loan status. You can make an application with just a few clicks online. Once you submit the application form along with the required documents, lenders will sanction loan in a couple of minutes.

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