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Things To Know Before Taking Home Loan
Buying a home is like turning a dream into reality for many in the country. To fulfil this dream, a lot of people often apply for home loans. While this may seem like an easy task, it is advised that you must do your research before making the final decision. After all taking a home is a lifetime decision that is hard to change.
There are plenty of things a person needs to consider to ensure that they do not end up regretting their home loans. In this article, we have jotted down some of essentials that can ease the application process and help you in choosing the right options as well. Take a look!
1. Strong Credit Score
Having a good and strong credit score is a step ahead in finalizing your home loan. A good credit score is one of the most factors that banking institutions check before approving your loan application. It is said that you must have a CIBIL score of at least 750 to be eligible for a home loan and get better interest rates. To maintain a good credit score, you must have a record of timely payments of credit card bills and existing loans.
2. Reasonable Interest Rate
Always explore all the options available in the market before opting for a final one. You must also compare the interest rates of different lenders to see which one profits you the most. Usually there are two types of interest rates available in the market: fixed and floating. While a fixed home loan rate does not have varying EMI, a floating rate depends on the MCLR and changes over the period of time. Mostly, people prefer the floating rate since it has the scope of less interest rate; thereby saving money.
3. The Fees
From the processing fee to the additional charge, check everything before taking the home loan. Usually, the banks and financial institutions charges 1% processing fee of the home loan. For the additional charges like application fee, balance transfer fee or legal fee, take time out to discuss it with the company before signing any document.
4. Tenure of Home Loan
The home loan’s tenure directly impacts your EMI; thus, it is important to check that beforehand. In most of the cases, the banks prefer to offer home loan on shorter tenure. This is also beneficial for the customer since it decreases the home loan interest burden on the EMI.
5. Suitable EMIs
EMI or equated monthly payment is the money you have to pay every month for repaying the home loan. This depends on you and how much you can afford as down payment. The higher the downpayment, the lesser is the EMI. There are various EMI calculators available in the market that you can use to keep a check on them.
6. Proper Documents
Last but definitely not the least; you must check all the documents of terms and conditions of the home loan before signing any document. It will help you be aware of all the charges, fees and penalties of the home loan and stay on the safer side.
Done reading? Well, keep these things in mind whenever you go ahead with your home loan. For more such article, keep reading BankAlert.