10 Tips for a Best Home Loan Experience


 

Applying for a home loan is one of the best ways to purchase your dream house without putting a lot of burden on your savings or investments. However, due to several home loan options available in the loan market, finding the right one can be a daunting task sometimes. 

Since a higher amount is required to buy a home, it requires your financial commitment for a long period. Here are the top ten tips for you to choose an online home loan based on your needs and preferences: 

Ten Tips for a Best Home Loan Experience:


  • Plan your finances in advance 

Before opting for a home loan, you must plan your finances by establishing a monthly budget. Convert a portion of your income into savings. Having savings allows you to pay a large portion of your loan amount as a down payment. Your home loan down payment can go up to 20% of your home’s insured declared value. 

You can also use an online home loan eligibility calculator to determine how much you can pay every month as EMI. There are three main components of the home loan eligibility calculator - loan amount, interest rate, and loan tenure. You can alter their values to figure out a suitable EMI. 


  • Compare interest rates 

Not all lenders offer the same rate of interest. So, if a bank or non-banking financial company offers a lower home loan interest rate which seems too good to be true, it is advisable to look deeper before signing an agreement straightaway.  Make sure to check online and compare different lenders’ offers. The benefit of comparing interest rates is that you can choose an interest rate that best serves you. The interest rates on an online home loan start from as low as 7.99%. Go for a lender that offers a lower rate of interest with flexible terms and conditions. 


  • Go for a floating rate of interest

Choosing a fixed rate of interest sounds like a better idea if the loan tenure ranges between 2 to 5 years. But, if you take a home loan for more than 15 years, it would be wise to opt for a floating rate of interest, as market forces usually cause rates to change over time. Most home loan lenders offer floating rates of interest, as the average tenure for a home loan is 20 years. This would benefit you if the  interest rate reduces. So, you can reduce your interest rate as per the instruction of the RBI. Besides that, you will not have to incur a foreclosure penalty if you plan to foreclose your loan. However, do remember the interest may also increase. Thus, it is advised to have an in-depth discussion with your lender while applying for the loan. 

 

  • Check your credit score

It is commonly known that a healthy credit score attracts better home loan deals, such as lower interest rates and higher loan amounts. It is a three-digit number that indicates your creditworthiness. Before applying for a home loan, you must check your credit score and ensure that you meet your lender’s requirements. If you have any discrepancies in your credit score, take the necessary measures to rectify those errors. 


  • Keep all the financial documents ready

Each lender requires several documents to apply for a home loan. Keeping these documents ready before submitting your home loan application online can accelerate the loan approval procedure. The required documents required are KYC documents, salary slips, income tax returns, and bank statements. The lender will also ask for documents pertaining to the property you wish to purchase. In case of multiple applicants, documents of all co-applicants will be required.



  • Find a reputed lender

Before borrowing money from any bank or non-banking financial company, you must conduct thorough research and ensure your lender is legitimate and is registered with the Reserve Bank of India.  Refrain from offers made by unknown agents claiming to be a representative of a known lender without any identification proof, or who make unrealistic offers such as no income proof required or no credit check required. 


  • Utilize a home loan calculator

The housing loan emi calculator is the best online tool to determine your affordability. Based on the loan amount, interest rate, and loan tenure, you can understand how much you can afford to pay as EMIs. It enables you to decide you can borrow based on your monthly earnings. 

  • Know the foreclosure norms

The benefit of taking a home loan is that there are no foreclose penalties, as the Reserve Bank of India recently banned financial companies from charging borrowers for foreclosing their loans. So, make sure you are aware of RBI’s instructions before applying for a loan. 



  • Take expert advice

You can also find people who have been in the loan business for a long time and take their advice before opting for an online home loan. Taking expert advice can help you find the right lender and flexible loan terms and conditions. You can also visit banks to inquire about their products and services. 


  • Carefully read all the documents

Reading your loan documents must be your priority before signing them. These documents contain details about the terms and conditions of your home loan. You must read the fine print and clarify all the doubts before signing the agreement. Sometimes lenders do not mention crucial details, and it lies upon you to read these documents and ensure to agree with them.

Research well before signing and filling the loan application.

 

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