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Basic Things about Home Loan you need to Know

Basic Things about Home Loan you need to Know

Learn these 4 things before talking to any lender.

1. From whom can I get a Home Loan?

In India, you can avail of Home loan from three sources. The terms and conditions are not very different for each of them when it comes to interest rate, payment scheme, and eligibility.

Banks– is the most widely available source for availing Home Loan.

NBFCs – are an emerging source of financing Home.

Life Insurance Cos.– also provide the facility of availing Home loan along with the feature of clubbing your insurance premium and the EMI.

2. How can I qualify?

Many factors are looked into consideration when you apply for a Home Loan.  Some of the important ones are:

Income: it must be above the minimum limit.

Employment: Must be stable.

Existing EMI: it must not be too high for your income to accommodate another EMI.

Down Payment: The higher the amount you can pay as down payment, the better it is.

3. How much should I pay as Down Payment?

In the best-case scenario, a minimum of 10% down payment is required. However, it is recommended to have at least 20% of the amount as a down payment.

Remember:

LOWER DOWN PAYMENT– higher monthly payment

HIGHER DOWN PAYMENT – Favorable home loan deal

4. How much tenure should I choose?

You can choose the tenure of Home Loan as well based on the amount you want to pay each month.

LONGER TENURE – lower monthly instalments but higher interest cost

SHORTER TENURE

Home financing is not as tough as you think. The above details are based on the basics, get a hold of them, and choose a trustworthy lender who can walk you through the process.

Summary

Having your own home is a dream come true. And this dream often takes the path of Home loan. Thus, it is only prudent to know the basics of the Home loan before applying for it.

1. The sources: You can avail of a home loan from a bank, an NBFC, or a Life Insurance Company. The eligibility or terms of bank and NBFC are almost similar. While Life Insurance companies also provide the facility of merging your premium and loan EMI.

2. Eligibility: In the case of Home loan, there are many factors to be taken into consideration like the type of property, location, value, etc. However, some of the prominent ones regarding your eligibility as a borrower are:

a) Your income must be above the minimum criteria of the lender.

b) You must be having a stable job or an established business.

c) Your current debt obligations should not be too high.

d) You are also required to make down payment. Higher the down payment is the better.

3. How much Down Payment: Minimum of 10% down-payment is definitely required. However, you should always aim for having at least 20% as a down payment.

4. Tenure: If you choose longer tenure, then you will have lower monthly expense but higher interest cost and vice-versa.

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