10 Things to Make Note of Before Applying for a Home Loan
A home loan helps people buy their dream house without exhausting their savings or burning their monthly budget. The applicant has to simply apply for a home loan and pay monthly instalments for a specific tenure and enjoy the benefits of the residential property.
However, there are various elements one must consider before they apply for a home loan, like interest rate, EMI amount, etc., to crack a profitable deal.
10 Things To Take Into Consideration Before Applying For a Home Loan
- Loan Amount – Once you start planning to apply for home loan, identify the loan amount you will be required to buy a residential property. Banks and financial institutions generally approve estimated loans of upto 75 -90% property value. You can also have a co-applicant in the home loan for maximum benefit.
- Repayment Tenure – The planning to apply for a home loan should also include the timeline to return the loan amount to the bank or financial institution. The loan amount and repayment tenure influence the applicable interest rate.
- EMIs – The EMI amount includes the principal amount and interest amount. Use the home loan EMI calculator to identify the payable monthly instalment amount. You can also try different combinations of the loan amount and repayment tenure in the home loan EMI calculator to find the budget-friendly EMI amount.
- Types of Home Loans – Before you apply for a home loan, you will have to understand and select the type of home loan. Generally, there are three types of home loans – Fixed-rate, Floating rate, and Combination rate home loan.
- Additional Costs – Additional charges like administrative charges, processing fees, etc., to be borne by the applicant during the home loan application procedure. Banks or financial institutions generally do not charge additional costs under floating rate home loans.
- Eligibility Check – After you have finalised the type of home loan, check out the eligibility parameters of the same. To get hassle-free approval for a home loan, it is essential fulfilling all the parameters mentioned by the bank or financial institution, like age, income, CIBIL score, etc.
- Documentation Process – Every bank or financial institution requires a specific set of documents for home loan approval. The documentation process will need documents like property registration certificates, identity proof, etc. Read the checklist and arrange the documents accordingly.
- Buy An Insurance – The applicant must have an active insurance cover before they apply for a home loan. If the applicant witnesses any unfortunate event or mishap, the insurance cover acts as a guarantor to pay the outstanding home loan amount.
- Defaulters – In situations where the applicant cannot pay the EMI amount on time, a penalty is levied upon them. Under worst-case scenarios, where EMI payments are outstanding for three or more months, the banks or financial institutions hold power to take legal actions against the loan applicant.
- Pre-Approved Loan – A pre-approved loan will help you identify and shortlist budget-friendly residential properties. Once you find the ideal residential property that suits your needs, you can easily take possession of the property with a pre-approved loan.