Buying a house, be it an apartment or a villa, is a major financial decision. It’s important to know what’s in store for you before taking out a home loan. Here are 10 things every home loan seeker should know before signing on the dotted here.
Banks will assess your eligibility for the home loan based on your income and capacity to repay the amount.
Type of Home Loans
Banks offer different types of home loans. The three types of home loans include floating rate loans, fixed rate loans and combination loans.
Getting your home loan pre-approved helps you set a budget and narrow you search to suitable properties. The bank will have properties approved by them, which will reduce the number of documentation required and give you a better selection of quality properties.
Home loan amounts range from 75-90% of the cost of the property, based on your loan value. The loan amount can be increased by adding a co-applicant.
Cost of Home Loan
Home loan costs include processing fees, interest payments, administrative charges, prepayments penalties etc.
The repayment installment of the loan includes principal amount and interest on the outstanding amount of the loan
Based on customer’s eligibility, home loans can be sanctioned for a maximum tenure of 30 years. Longer the period of the loan, lower the EMIs.
Mandatory documents include KYC documents, credit/income documents and property documents.
Purchase a loan cover term assurance plan to cover the loan amount.
You are advised to be regular in EMI payments. If more than three installments are missed, the bank can take direct action against the defaulter without court intervention In case of financial issues, inform the bank at the earliest and check the possibility of getting an extension in the repayment tenure