If there is one dream that we all have and wish to achieve, it is about having our own safe place. The dream is to have a home that is all yours, a home that you purchased with your hard-earned money, and a home that you will never have to move out of again.
Buying your own house is the first tick mark of having a settled life. You start saving from an early age but still, with the real estate prices shooting up, it might not be enough. The simple solution to all your problems? Take a home loan.
Don’t worry, the term loan isn’t a scary little bubble anymore. It is an effective and relevant solution to help you own your own house as early as possible. With online applications and good interest rates, you will only feel a small pinch in your pocket once the EMI goes out. Well, it will all be worth it!
If you are planning to take a home loan, here is everything you need to know
1. Eligibility
The total home loan amount that you can process will depend directly on your capacity to repay the loan. Lenders look at your monthly income, your monthly expenses, and savings to see how much EMI you’ll be able to pay.
In fact, a sneak-peak into your assets, family total income, and past liabilities (any other loans, etc.) are also considered. The idea is to ensure you don’t default on the loan. Also, because of the same reason, there is often an age limit on the candidate applying for the loan as well.
2. The Amount
Your home loan will finance your home purchase but it won’t completely fund it. Lenders usually have a minimum requirement where some amount (10-20% minimum) of the cost of the new house has to be borne by the buyer.
Then, the remaining amount is managed by the loan. Once you get your sanction letter, where the bank has specified the quantum of the loan, you can then feel assured. Post this, as per your home purchase payment plan, you can withdraw the loan amount and clear your dues.
3. The Process
Once you have made up your mind and finalized the amount, you need to work on the loan application and approval process. As an applicant, you need to apply with a co-applicant first for the loan. Next, you need to focus on the interest rates and negotiate if required.
Once your process is final, pay a lot of attention to detail before signing the loan document. Read the clauses stated for default, interest rates, disbursement, and legal action. With a loan, especially of a huge amount, you cannot afford to make any mistakes.
4. Decide on the return
The most important part of the loan is the EMI payments. Your scheduled EMI payments will start as per your agreement post your loan disbursement.
Based on your monthly savings, you should always try to pay off the loan as quickly as possible. Extending the loan over many years will cause you to pay a higher interest amount.
In fact, in some cases where people fail to realize this, they pay an interest that is in total higher than their principal amount itself. Also, ensure your interest rates are accurate in the long run as well.
5. Keep an eye out
You should always compare multiple banks before making a decision. Some banks might give you a higher range of loan amounts but might charge higher interest rates. Based on your needs, your comfort, and the best deals for you, choose the right bank.
In fact, even after taking a loan from a bank, you can switch to another bank providing you a better deal. The only additional cost will be a processing fee on the switch.
Over to you…
Always remember, where there is a will, there is a way. Don’t let anything stop you from buying your dream house!
However, take some time to know your current and long-term financial standing before confirming a home loan. In fact, your family members should also have a say. After all, it is an important and fruitful decision for your entire life!
