Buying a home is the most important and also the most extended financial commitment for most people. Home loans provide access for people to buy their dream homes easily. However, availing of a home loan is easier said than done. People who want to buy a home prefer home loans, yet most of them are unaware of the formalities and loan processes. A lot of things such as interest rate, credit score, eligibility, and several other fees and documentation come into the picture when applying for a home. Overlooking such factors will only end you up in trouble in the future.
Buying a house is a major and once in a lifetime decision for many people. Hence, it is essential to learn about everything that goes into buying a home far in advance. This will help you make the right decision at the right time. Especially if you are a first-time homebuyer, it is crucial to learn about the process of availing the loan and some important things to keep in mind. Right from the type of home loan you should take to the loan term, there are many factors to consider. Let’s look at some of them here in this article.
7 things to consider when taking a home loan
Read the documents thoroughly
You do a lot of research and legwork to finalize the home, right? You see a multitude of projects and do multiple visits before you make the final decision. It’s likely to do so because people think of their home as a longtime asset that will also transfer to future generations. Why is it any different for a home loan? Although it doesn’t transfer to future generations, hopefully, you will repay it for at least ten years to up to 30 years, whatever the tenure you chose. So, it is vital to read the documents or the fine print when taking a home loan. A home loan is a long-term commitment and will create an impact on your finances throughout the tenure. Hence, it is important to know all the terms related to it to avoid future surprises and unwanted circumstances.
Keep an eye on interest rates
One of the most important factors to consider when taking a home loan is the interest rate. Banks alter the interest rates when the market rates fluctuate. Interest rates, if deceased, is not a problem, but if there is an increase, you will have to carry an additional burden. So, it is important to think about whether to choose fixed interest rate loans or fluctuating interest rates. This way, you will at least know what you are going to pay every month. Also, when choosing a fixed rate, check if the fixed interest rate is applicable for total tenure or for a few years.
Terms and conditions
Read all the terms and conditions before you avail of the cash. It is because some banks hold complete control over changing the terms and conditions of the contract. This may bring unexpected surprises to the homebuyers. So, it is crucial to check such terms. Make sure the bank can only alter the contract’s terms when they have written consent from the borrower.
Find if there are any special clauses
Additionally, you should also look for any special clauses which may bring serious impacts in the future. Some banks may ask for additional security from the borrower to retain an outstanding loan amount in case of default. In the other case, if the borrower has other active loans from the same bank, there may need additional documents or process to adjust the repayments. So, it is quite important to look for such clauses. Moreover, understanding the terms and special clauses will help you learn if the bank charges any hidden fees. This way, you will know more about the amount you are going to pay to the lending bank.
Choose the tenure wisely
The other important factor to keep in mind is choosing the right tenure. Most people go for a longer tenure to escape the costly EMIs. But the thing you should note here is you are going to pay interest for a long time. So, calculate your monthly income and expenses to estimate how much you can pay for EMIs every month. Based on your affordability and commitments, choose the tenure. You can repay your loan faster by paying a partial or full amount whenever you want.
Get an expert help
Doing the math and reading minute details to avoid future surprises is not that easy for everybody. So, if you think you need expert help, feel free to hire one. However, make sure you also get to learn about the loan completely whenever you get time.
Credibility of the property
One of the first things that determine the eligibility to avail of a home loan is the credibility of the property. Of course, your credit score, age, and professional background are also important. Banks conduct a thorough background verification and approve the loans only if the property is legal, and the developer is credible. A few factors like property’s market value, age of the property, locality, document verification also play a key role in your home loan eligibility. So, make sure you picked the right property and the right location to make your home buying process go smoothly.
How can you avail a home loan easily?
If you choose the right property, more than half of the home loan process will be done effortlessly. Banks approve home loans faster for credible property developers that have good relationships with them. Looking for the best residential properties that match your requirements and affordability? Sree Hemadurga Paradise by Sharvani Ventures is a premium gated community that offers luxury 2 & 3 BHK flats at affordable rates.