A home is an essential possession in everyone’s life. Owning a home gives peace of mind as you know you have a place to rest and relax after a stressful day at work. If you live in a rented property, you do want to move to a place where you do not have to worry about rent or other landlord-related issues.
If you want to buy a new home, you can easily avail a home loan facility these days. All reputable banks offer home loans at attractive rates. You can even find EMI calculators online to give you a fair idea about the interest rates and EMIs to be paid. But there are several different aspects that you need to know before choosing a home loan option.
You might have heard people saying that their home loan application got rejected. This happens because of a variety of reasons. To ensure you get the loan amount you require to buy your dream home, keep the following things in mind:
1. Research and Compare Loan Choices
It is easy to connect with the banks and other lenders for a home loan, thanks to the Internet. However, this also means you can get several quotes for a home loan almost instantly, which can make it hard for you to choose one.
Before you zero in on one of the home loans options you have in hand, make sure you compare them in terms of total interest to be paid. It is the loan interest rate that determines the extra sum you need to repay to the lender above the borrowed loan amount. Calculate the approximate loan interest using online EMI calculators for each option before deciding further.
2. Check Your Eligibility
The amount you can borrow from a bank to buy a home depends on your eligibility for the same. It is where your credit history or CIBIL score comes into the picture.
The bank you choose to get the loan from, will check your CIBIL score to know more about your credit-worthiness. People who have a bad credit history, which means a low credit score may not get the loan they expect. Similarly, they may become eligible for a smaller loan amount than what they seek to buy a home.
So, get your home loan eligibility checked before you apply for it. This will end the hassles that may arise later. Renowned banks, like Axis Bank, follow a simple process for the same. Visit the bank branch near you or the bank’s website to ask about your home loan eligibility.
3. Make Sure There are No Hidden Charges
Other than the loan EMIs, you may also need to pay some additional charges to the bank. These include administration fees, service charges or processing fees, which vary from one bank to the other. Knowing about all these charges or fees upfront is crucial for you.
Think of it this way – You know you must pay an EMI of INR 15,000 for the home loan. But suddenly, you get an email from your lender saying that there is another monthly charge of INR 2,000 to be paid along with the EMI. This can have an impact on your regular expenses and other financial liabilities.
So, ask the bank about the final EMI and all the charges beforehand.
4. Know About the Foreclosure Policy
Foreclosing your home loan means paying the outstanding amount before the loan tenure ends. Each of the EMI you pay for it includes a portion of the principal amount, plus the interest. If you choose to foreclose the loan, it means you won’t be paying the extra interest to the bank from then onwards.
To deal with such situations, different banks have different foreclosure terms and conditions. In general, they ask the borrowers to pay a one-time interest at a specific rate on the outstanding amount. This rate varies from one bank to the other. So, you need to know about it too.
So, keep all the aspects mentioned above in mind and you will find it much easier to buy a new home for your family, using a home loan.