Taking A Loan To Buy Your House? Here's What To Keep In Mind

Mozam By Mozam, 13th Feb 2018 | Follow this author | RSS Feed | Short URL http://nut.bz/1hojh8_y/
Posted in Wikinut>Business>Accounting & Finance

With the prices of houses skyrocketing, it’s common for a person to seek housing loans from banks or non-banking financial companies.

How To Take Home Loan?

However, it’s probably the biggest financial commitment most people make. The monthly installments on your loan last for at least a decade or so and it counts for the largest monthly expenditure for all this while.

Because of falling interest rates, home loans are now being more affordable in your pockets. The online application and quick loan disbursals just seemed to be the icing on the cake. You can say today taking a loan is as easy as buying your favorite shirt or ordering pizza online.

After careful comparison of loan products of different lenders, you can fill up the form, attach the necessary documents and SUBMIT online. Within a day or two, you'll be able to know the status of your loan. However, you will get approval for home loans only after banks go through credit history and check your borrowing.
Now that you have your plans set to take home loans, there are few things you should keep in mind:

Loan Eligibility

House lenders will have a list of eligibility criteria such as your income source, risk appetite, job or business stability, prior financial commitments, your age, number of dependents and mostly important credit history. Banks or finance companies typically look at your credit history to understand if you clear debt on time and prefer a credit score of 750 for lending money. These factors also help you to negotiate your interest rates.

Down Payment

Banks or finance companies will only sanction a loan amount of around 70-75% and the rest of the money has to be produced by the applicant itself. Therefore, it's important you chalk out a plan to make savings at regular intervals before you start looking for a house. You should calculate the down payment you would like to pay. If you choose more to pay from your pocket it will prove beneficial for you in the long run. The more you pay, lower would be your interest rates.

Interest Rate

Obviously, it’s the decisive factor for your home loans. It’s simple - low the interest rates, lower would be the monthly installment. Lenders offer fixed interest rate, floating rates or partial-fixed interest rates. Fixed rates are constant throughout the tenure and floating rates depend on market conditions and change with bank's changing lending practices. Under partially fixed rates your interest rate will be fixed for a particular period of time and then its moved to floating rates.

This is because initially customer wants to be on a safer note and the interest rate is kept fixed later on as he or she clears some level of debt it moves to floating rates so he or she could bear the brunt of higher rates if in case the markets are tidal.

Compare loan Products

Many people in their quest to buy dream home just take a loan from the first lender who offers them the money. However, there are hundreds of banks and non-banking finance companies who offer home loan at attractive interest rates and willing to understand you and offer customized solutions. So, it's better to go online and compare the interest rates and charges associated with home loans.

Check every details, policy terms and conditions minutely and then zero in on a particular lender. Check their reputation in the market as well.

Buy Insurance

A golden tip - Very few people understand the importance of insurance policy when you take a loan. Now that you avail a finance, it's important you take a policy as well because the outstanding balance liability falls on your family's shoulders in case you perish the world due to an unfortunate incident. You can avoid the financial burden on your family taking an insurance cover as well.


Home Loan, Home Loans, House Loan, Interest Rates

Meet the author

author avatar Mozam
Mozam Khan is a Profession blogger since 2015, He has been written and Publishing blog and article on home loan, home loan interest and finance services.

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