Self home is a dream of all and taking or building a house is a lifetime decision. Prices of houses are soaring in the market and it’s not an easier task to buy a home nowadays. For all those who desire a ravishing house in their dream city could apply for home loans. But, these loans are easier said than done. Though, we encounter advertisements of every bank providing home loans; getting a loan sanctioned is a tedious task. There are different terms and conditions, one need to fulfill for getting money from lenders.
Home loan is a form of secured loans, which have stringent guidelines to be accepted by borrower. Here, in this article we will tell every aspect of home loans, one need to know.
Basically, a home loan is a secured form of a loan; it means firm collateral is mandatory to put on stake. Other than this, banks consider few factors.
First comes the basic monthly income of the borrower. Banks usually calculate the loan eligibility through EMI. They limit the installment maximum up to 40% of salary so, lower income is not suitable. Also, other outstanding loans play a part. Higher number of dependents means lower repayment capacity. Therefore, one needs to resolve all these before applying.
Age and profile also matter to the bank. Person with fixed source of income is preferred over self-employed with erratic earnings. Age defines how many working years you have, according to that the loan tenure is calculated.
- Research well
It is better to research by your own rather than guided by an agent. Some banks pay less commission to the agent so they come out with bad word of mouth for them, which may not turn to be true.
You should get deeper knowledge about the bank’s criteria and interest rates. Also, research about the market economy is must, which will help you to choose between home loan based on fixed interest or floating interest.
- Cibil score
As I said, it is a secured form of loan and banks discharged money based on the cibil score of the borrower. 80% of the secured loans are given to them who have certainly a very good cibil score. Banks are reluctant to offer loans with low score as the trust factor is very little with them or in some cases they may decide to give loans but on higher interest rates.
- Don’t hesitate to negotiate
If you share a long term relationship with bank and have a good history of timely repayment with good cibil score then never hesitate to negotiate the rates with bank. Though the bank would have upper hand but still they may consider slabs on interest rates as they aim to have good business with customers.
- Documents and time tenure
Before signing documents, carefully read the terms and conditions of the bank. This is must in every deal. Also, one should never play on longer time tenure loan; you would certainly end up in paying much more than loan. It is required that put maximum money as down payment which will cut the principal amount and the monthly EMI.
In the era of competition, every other banks aim to increase its customer, hence they provide the best offers on different loans. SBI is best suited for home loans or secured form of loans. For unsecured loans, one could best deal on Axis bank personal loans or PNB loans.