4 things to keep mind when in the market for home loans.

Home Loans are one of the biggest blessings for people with homeownership plans on their mind. They provide a majority chunk of the funds required & help you enjoy complete peace of mind from property prices today! They also help you buy into one of the best investment opportunities in India, property and help you save a considerable amount of money through tax benefits under section 80C and 24 of the Indian Income Tax Act.

However, before you find a financial offering and sign your name across the dotted line, this article will highlight 4 things you need to keep in mind to ensure you are not blinded sided by any unforeseen complication later on.

1. The loan offering provided.
The first thing you want to keep in mind is the financial product on offer. You need to bear in mind the amount of funding being provided, the interest rates applicable and the length of the tenure on offer. Most lenders will provide you up to 90% of the property’s value as the amount of funding at interest rates ranging between 8.35% & 9.65% per annum with tenures as long as 30 years.

2. Check the down payment you need to arrange.
As mentioned earlier, the lender will mostly only provide a major chunk of the funds required and you will have to arrange the rest. So check with the lender how much they are willing to provide for the property of interest and how much of a down payment you will need to provide. If possible, provide a higher down payment then required as this will reduce the loan amount you have to borrow and cut down the amount upon which the interest on your loan is calculated.

3. The processing fee of home loans.
Besides for the interest rate, you’ll also want to pay close attention to the processing fee being levied on your application. You need to pay this amount for applying for the loan and it is not refundable, even if the application is rejected. Some lenders charge as much as 2% of the loan amount which can turn out be a huge amount, another charge 1% of the same which is still a sizeable amount of money while others offer to waive this cost off if they see you as a promising borrower.

4. Keep in mind your home loan eligibility.
Everyone has a different eligibility level when it comes to home loans. What the lender offers you might much higher or lower than what it offers to the next applicant. Your eligibility depends on a number of factors such as your credit score, your incomes, your monthly obligations, your financial capacity, etc.

Knowing your eligibility helps you apply for an apt loan amount and ensures your application isn’t rejected because you’ve applied for a loan amount that’s above your reach. It will also ensure you do not lose your processing fee. To find out your loan legibility, you can use one of the many home loan eligibility calculators that are available on most lenders’ websites and on aggregator pages as well.

Knowing these 4 things will help you a good experience with home loans and ensure you get a financial offering that suits all your needs and requirements. We hope this article has further your knowledge and will help you make an informed decision.

Good luck and all the best!

Understanding the jargons of your home loans

The decision to buy your property is a big and an important one. When you apply for housing finance, you're getting a financial commitment for a longer term. You might do the best to prepare with paperwork, funds to make the down payments, your lenders will do a rigorous credit assessment to ensure that lending loan will entail for minimum risk to them.

There is no specific formula to monitor or analyze housing finance. Everyone has to go through financial requirements in life and therefore their goals are different. Some might reduce monthly installment due to financial crunch or some may increase it to clear off the home loans as quickly as possible. While availing your best home loan deals, the first thing would be estimating your personal wealth and home loan eligibility.

Once you come to know the principal amount that you may qualify for, you can check the flexible-repayment options as well for clearing off the debt. Home loans could be taken with interest rates as low as 9 to 10% and come under variants like fixed rates, floating rates, or partial fixed-floating basis.

Fixed interest rates are constant throughout the loan term and floating rates are linked to market conditions. They may change periodically and they're linked to the base rates, inflation, other economic parameters. Each bank or finance company will have their own methodology to fix this base interest rate. The rates have to be declared by the lender each quarter. Some private lenders offer best home loans in the form of adjustable rate of interest rates, tru-fixed loan for 2-3 years or 10 years which is constant for given tenure and then floating for the rest of the time.

It's better to keep an eye on the various changes in interest rates during the loan tenure. In case you find the interest rates are costing more in your pockets you can consider changing to another lender. Also, remember that every time there is an interest hike, tenure of the home loan will get prolonged. If you have initially taken a loan for 20 years the rate increase might stretch to around 30 years. Choosing right repayment strategy will also help you clear off the loan in much more planned and efficient manner. Markets have the various forms of repayment strategies like step-up repayment facility, flexible loan installment plans, trance-based, accelerated repayment scheme or telescopic repayment options.

A couple of years ago, availing home loans would be an arduous task with a manual application, documents attestation, and visiting branch for submission and finally waiting for the approvals. However, due to the online home loan application process, things happen with a spur of the moment. Right from visiting the website for the comparison, downloading the form to uploading a scanned copy of documents, everything is at the touch of the button on smartphones, tablets or computers.

Prior to your decision of buying a home individual seeking to take loan should be well aware of the situation such as their income source, risk appetite, affordable interest rate, EMI you can pay, etc. The online home loan is the latest buzz amongst the educated segment who believes in doing smarter things with least amount of time.  It has immensely helped people seeking home loans to fulfill their dreams.