10 Things To Know Before You Avail Of A Home Loan
The decision to invest in a property is a very crucial one as it is a big-ticket investment. If you do not have ready funds and are not favouring liquidating your savings, then the home loan is a feasible option. Various market players offer a home loan with lucrative terms. A home loan is a long term obligation, and you should be able to hold on to it without any hitches. So, before venturing into this commitment, it is recommended to ponder about the following points.
#1. Loan Options
Several financial institutions/banks offer the best home loan with attractive rates and features to make your dream of owning a property come true. With collated information available easily online, it will not be difficult for you to do thorough research about the various options available in the market. You should deliberate upon the main three aspects: the margin to be provided or the down payment to be made, the EMI and the repayment term. Apart from these, you should weigh the other added costs added before and after submitting the loan application.
A good option is Federal Bank Home Loan associated with attractive features and has simple eligibility norms.
Federal Bank Home Loan Interest rate starts at 7.65% p.a.and goes up to 7.80% p.a.
Before deciding on the loan provider, you should check if you can comply with the eligibility norms. Some financial institutions have elementary eligibility norms, whereas some have made it very extensive. The eligibility norms include age, income, employment and experience.
The eligibility criteria for Federal Bank Home Loan is as given below:
- Salaried/self-employed individuals, business people and professionals can apply for the loan.
- Both resident and non-resident Indians are eligible for the loan.
Dreaming big is good, but you should be able to assess your affordability to realise your dream. Home loans are big-ticket loans involving massive amounts. The EMI arrived after extensive research should suit your lifestyle. There should be ample funds at your disposal to meet any financial difficulties after providing for the EMI. The obligation is a long term one, and an affordability check is a must to enable you to pay the EMI promptly without stressing your pocket.
Choosing the home loan as per your affordability is a prudent move. But you should be able to service the loan without any default. Keep in mind that the home loan EMI is a long term commitment and has to be taken care of come what may. It would help if you learned to spend wisely to keep some buffer for any emergencies. Aim at cutting down unnecessary expenditure to save more to pay off the loan as early as possible to cut down on the overall cost of the loan.
#5.Choice of EMI
If you have the resources to make a higher down payment, then go for it. This will fetch you a better interest rate and will reduce the overall cost of the loan. The EMI depends on the downpayment and the tenure you choose. Learn to keep the EMI as low as possible to make the FOIR ratio a favourable one.
#6. Repayment period
The banking sector has provided various repayment options to make your life easier even after using a home loan. A maximum tenure option of up to 30 years is offered to make the outgo towards EMI affordable to all. Your budget should determine the choice of your repayment option. For e.g – The Federal Bank Home Loan can be repaid within a maximum repayment tenure of 30 years.
Cibil score is the scale to assess your credibility. Aim to keep the score as high as possible. The desirable CIBIL score is 750 and above. Regularity in paying off the EMI or credit card dues reflects your financial discipline. A higher CIBIL score will fetch you a better interest rate and concession in other charges as well. In addition, you can expect quick processing and disbursement of the loan amount.
#8. Foreclosure policy
Even if you have funds at your disposal, you will not reduce the loan burden. Strict foreclosure policies will make it difficult for you to make prepayments to the loan account and reduce the tenure of the loan. Some financial institutions do not have a foreclosure policy, and even if foreclosure is permitted, there will be a charge associated. Study the charges applicable for foreclosure and calculate the savings on the overall cost you will make despite paying the charges before applying for a home loan.
No Prepayment charges for Federal Bank Home Loan at a floating rate to individuals
Prepayment charges for Federal Bank Home Loan to others: 3% of the outstanding loan amount.
Apart from the interest, there will be other charges like the processing charges, documentation charges, Cersei charges, Mortgage charges, etc. Have a discussion with the lender regarding the charges to assess the overall cost of the loan considering these charges. If there are any monthly charges, you will have to make provision for these charges and the EMI.
#10. Scrutiny of Loan Documents
You should understand the clauses set out in the loan documents before execution. Read in between lines for some hidden provisions. It is crucial to know what you agree to before executing the documents to not be in trouble in the future. You can take help from the lending bank or institution’s representative if required.
Considering the above points will help you make a wise decision. You can make a collective assessment and choose an option that is most lucrative as the amount involved is huge. You can consider availing Federal Bank Home Loan for maximum benefit.