3 things you need to know about a home loan before you apply for one.

With today’s property prices, taking a home loan seems like the only way to become a homeowner quickly. If you were to save-up funds to purchase your home, you’d be collecting for years. You’d also have to contend with the rate of inflation whilst also throwing away large amounts of your monthly income as rent money.

So if you are thinking of going in for a home, don’t second-guess the decision; it’s a wise one that will help you become the proud owner of your dream home without having to wait for years on end. Having said that, there are a few things you must keep in mind before you go ahead and apply for the loan. This article will highlight 3 of these aspects in an attempt to ensure you enjoy a smooth, hassle-free loan experience.

1. Your eligibility and the EMIs you’d have to pay.

The first thing you need to know before you apply for a home loan is your eligibility and roughly how much you’d have to pay as an EMI amount every month. Eligibility is the loan amount a lender is willing to provide you based on a number of aspects such as your monthly income & obligations, your creditworthiness, your financial position, etc. Applying for a loan amount without knowing your eligibility could result in your housing finance application to be rejected and your processing fee wasted.

You can check your eligibility by using an Eligibility Calculator wherein you’d have to type in things like your monthly income, obligation, the interest rate of the loan and the tenure for repayment. Within seconds of entering these amounts and hitting enter, the calculator will tell you a near accurate loan amount a lender would be willing to sanction to you.

You should also know the EMIs for this amount before applying for the loan or at least before the repayment process begins. This is because, without knowing the EMI, you cannot create full-proof plans to repay the loan. Again, you can simply use an EMI Calculator to compute the EMI amount. Enter in things like the loan amount, the tenure and the interest rate. Within moments you’ll have a rough EMI amount basis which you can chalk out plans to accommodate this cost in your monthly expenditures.

2. Home Loan Interest Rate & charges.

Interest rates & charges are also very important factors of your home loan. Most housing finance loans come with rates ranging between 8.35% and 9.15%, depending on your loan amount. There are many things that influence the rate you are provided.

You’ll also have to choose between fixed, floating and semi-fixed rate. This is choice that has haunted many potential borrowers and to explain which one is better for you will require an article of its own, one that you should be able to find over the internet.

When it comes to charges, every lender will have a different set of charges that will vary in number and extend from the next lender’s set of charges. Among them, you should pay close attention to a few important ones such as the processing fee, prepayment charges, late payment charges; cheque/ECS swap charges, etc.

3. Insurance with your home loan.

Getting a life insurance with a home loan makes a lot of sense. It safeguards your immediate loved ones from the financial burden of repaying the loan in your absence. However, there are many minute details when it comes to this aspect of a housing finance loans.

For instance, some lenders will force a certain insurance policy or plan on you, other will have a tie-up with an insurance provider but won’t force it upon you and some allow you to choose a plan that suits you. Explaining this aspect completely will again take more than a single article, and it’s wise to speak to a financial expert to get an in-detail explanation of this aspect.

Remember, the more you read-up and research before you apply for a home loan, the better your chances of coming out of the debt all smiles and with a property to your name. We hope this article has been helpful.

Good luck and all the best.