Home is place or shelter where we create a number of memories with our loved ones. Everyone has a dream of having his own house but purchasing home is not an easy task. Its value goes in lakhs and crores. You can fulfill the dream of having own house by taking a home loan. The home loan can be used for various purposes such as purchasing a new home, construction of a house on a plot, home improvement, extension, renovation etc. It is a great form of financial assistance if you are short on cash. Taking a home loan is a lifetime decision because it might last for years. Home loan is the cheapest compared to the other types of loan such as personal loan, mortgage loan etc. Banks and NBFCs offer special rates to the women borrowers/co-applicants. It also allows an exemption in income tax return.So, before taking a home loan you should consider few things in minds. Some of the things are:
Before going for a home loan, you should do proper research on your own. Don’t blindly follow the loan agents or the loan advisors. You should weigh all the option before taking any decision. Your research should include various crucial factors that formulate a loan such as down payments, EMIs and repayment tenure. Prior research of these factors enables you to choose a suitable home loan from a better lender at attractive interest rates.
Floating or Fixed Rates
Before applying for the loan you should know the difference between the fixed and floating rate of interest. Floating interest rate fluctuates with market economics and interest rates are linked to a bank’s Marginal Cost of Lending Rate or the NBFC’s base rate. These rates are usually lower than fixed interest rates. Fixed-interest rate brings a sense of clarity when it comes to loan repayment of the loan EMIs. People who have fixed budgets can get a clear idea of their EMI obligations. So, after knowing the difference between fixed and floating choose the best suited you.
You should check your CIBIL score before applying for any loan or credit card. 750+ score is considered as a good credit score and lender will be happy to lend you a loan if you have a good CIBIL score. A lower CIBIL score implies that you are a risky borrower and lender may reject your loan application easily.
Now, Reserve Bank of India (RBI) banned foreclosure penalties. You should make sure that you will not pay extra charges at the time of foreclosure of the loan amount. The sooner you repay your loan amount, the higher your credit score will be.
You should compare all the banks and NBFCs before finalizing. Whether you are taking a fresh loan or balance transfer you should check all the fees, hidden charges, rates etc.
Read All Terms and Conditions
Before signing the documents you should clearly go through the offer documents. You should read all the terms and conditions to avoid frauds.
Above these are the important points which you should keep in mind before applying for the home loan.