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10 Things You Should Understand Before You Avail A Home Loan

10 THINGS YOU SHOULD UNDERSTAND BEFORE YOU AVAIL A HOME LOAN CL>X Home Loan Buying a house is one of the biggest financial decisions that you and your family will ever make. For most first-time home buyers, availing a home loan is the only way they can bring alive their dream of home possession. If you are planning to take a home loan, it's important to understand all about it; after all, it's a commitment that will run into years till you can refund the entire loan amount. Here are 10 effects you should know before you apply for a home loan: ELIGIBILITY CRITERIA 01 The other The first step you need to take is to make sure that you qualify for a housing loan. important considerations include age, qualification, financial position, number of dependants, spouse's income and job stability. At the beginning, lenders will assess your eligibility for home loan on the basis of your income and repayment сарacity. TYPES OF HOME LOANS 02 The different types of home loans that are available are: VARIABLE/FLOATING RATE LOANS: In this type of loan, the interest rate is linked to the lender's benchmark rate. If there is a change in the benchmark rate, the interest rate also changes proportionately. FIXED RATE LOAN: In a fixed rate loan, the interest rate is fixed at the time of taking the loan. This rate of interest is applicable throughout the tenure of the loan. COMBINATION LOANS: These loans offer a part of the loan at a fixed rate of interest and part at an adjustable or floating rate of interest. HOME FIRST OR LOAN FIRST 03 It is important to get your home loan pre-approved before you select your home. Pre-approval helps you know your exact budget and makes your home search easy and focused. Pre-approvals even help negotiate better and close deals faster. You can also check with the lender about the availability of good properties in your chosen location. In fact, there are some projects that are approved by the lender, which not only relaxes the number of property documents needed by the lender, but also assures you of the quality of the projects 04 LOAN AMOUNT As defined by the regulator, most lenders provide a housing loan ranging from 75 to 90 percent of the cost of the property depending on your loan value. If you include a co-applicant, his/her income can be considered by the lender to increase the loan amount. The co-applicant may be your adult child, parent or spouse. The balance payment towards purchase of the property is expected to be contributed by you. COST OF YOUR HOME LOAN 05 The cost of your housing loan is also a factor to take into consideration while assessing its suitability. The cost will include the interest payments, processing fees, administrative charges, prepayment penalties, etc. Ideally your home loan should have zero prepayment charges for adjustable/floating rate loans. You should also be able to convert your loan to a lower rate by just paying a nominal fee. When considering a home loan, ensure that there are no hidden charges. As per the regulator, lenders need to transparently disclose information about fees and charges on their website. 06 EMI/PRE-EMI The cost of your housing loan is also a factor to take into consideration while assessing its suitability. The cost will include the interest payments, processing fees, administrative charges, prepayment penalties, etc. Ideally your home loan should have zero prepayment charges for adjustable/floating rate loans. You should also be able to convert your loan to a lower rate by just paying a nominal fee. When considering a home loan, ensure that there are no hidden charges. As per the regulator, lenders need to transparently disclose information about fees and charges on their website. TENURE 07 Home loans can be sanctioned for a maximum period of 30 years, subject to the customer's eligibility. A longer tenure helps reduce the EMI burden. For example, for a 20-year home loan of Rs 10 lakh at an interest rate of 10.40 percent, the EMI works out to be Rs. 9,917. Now if we increase the tenure to 30 years, the EMI falls to Rs. 9,073.* 08 DOCUMENTATION Documents needed for a home loan can be categorized as: • KYC DOCUMENTS: • CREDIT/INCOME DOCUMENTS: • PROPERTY DOCUMENTS: INSURANCE COVER 09 You must purchase a loan cover term assurance plan that will cover the loan amount. It's important to do your research to find out the best home loan insurance available. This will relieve your family from the liability of an outstanding loan as the loan is repaid by the insurance company in case something unfortunate happens to you. In fact, several lenders will insist that you purchase insurance at the time of availing the home loan. 10 DEFAULT It is best to be regular in paying your EMIS. If the customer misses more than 3 instalments, lenders have the power to take action against default directly without intervention of courts according to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). CONCLUSION Buying a house is a big step; it is also the most filling experience you will have in life. A home loan is one of the best ways to help you own your own home. CALCULATING EMI FOR YOUR HOME LOAN www.clix.capital/home-loan-calculator/ Clix Capital Services Private Limited CL)X 1800 200 9898! 8

10 Things You Should Understand Before You Avail A Home Loan

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Buying a house is one of the biggest financial decisions that you and your family will ever make.For most frist time home buyers, availing a home loan is the one way they can bring alive their dream o...

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Sanjeev Kumar

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