Most of us hope for a good deal on mortgage when we apply for a Home Loan. In today’s real estate market, purchasing a home is a huge task—any additional help is appreciated. But what is it about a Home Loan that scares so many people?
Home Loans aren’t all that difficult to get, but it is the hidden costs, the confusing Home Loan eligibility requirements, and—ultimately—the bank/NBFC that you pick, which will determine how your mortgage experience goes. Most of us have little to no experience in the world of real estate, so it makes sense that we aren’t aware of the intricacies of getting a good Home Loan deal.
Are there any set rules you have to follow? Are there any tricks that you should know of? What of the housing loan interest rates? How can you pay them back? What about the lenders? How can you pick the best lender?
All of these questions need to be answered before you venture into the world of mortgage. It’s equally important to know of the application process, and how it all unfolds. Here’s your guide to picking the best Home Loan option at hand. Learn things like how to pick your lender, the technicalities you should watch out for, and more.
What is a Home Loan?
A Home Loan is any loan that has been sanctioned to purchase personal property. Most NBFC/Banks offer their customers mortgage options; it isn’t all that difficult to find one. However, it’s the fine print, benefits, and other factors that come with your Home Loan that you need to worry about.
The immediate purpose of a Home Loan is to grant you ownership of the property you choose, but ideally, it should go above and beyond just that initial purpose.
A good Home Loan covers all maintenances and upgrades you might require before you call a piece of property your home. Besides that, the lender should also ensure that the process of application to sanction of the loan isn’t too hectic for you.
Are you Eligible for a Mortgage?
The next big question is—are you eligible? In simpler terms, are you in a financially sound position with a good credit history?
Eligibility is one of the simplest things to understand. You’ll need an identity proof, a proof of employment, age, source of income, and financial stability reflected in a few bank statements. You need to belong to a certain income bracket—and older than a ‘minimum age’—to qualify for mortgage. You might even need to present a few tax documents, depending upon whether you’re a salaried individual or self-employed. Remember, clients with good credit and repayment history are most likely to get their loan approved and sanctioned faster than others.
Once eligibility has been established, you’ll only need to get an application form, and attach the required documents. Make sure you keep all relevant documents at hand, in case the bank/NBFC require you to present it for proof.
What to Look for in a Home Loan
Now that the primary question of whether you’re actually eligible for a Home Loan is out of the way, you’ll need to think of exactly what you need from a loan. There are individual requirements you may have, that cannot be compromised upon. You can discuss these conditions in detail with the lender you’ve picked.
Picking the perfect lender is quite crucial, as you can probably see by now—the kind of lender you pick can make a huge difference in your entire Home Loan process. They can make it either the best experience, or the worst decision of your financial life. It’s essential that you pick a lender that is going to make the purchase easier on you.
Here’s another important factor: the interest rate. For obvious reasons, the housing loan interest rate is one of the most important factors to watch out for. You can pick between fixed and floating interest rates on housing loans, depending upon the stability of the market. These can differ greatly depending upon the tier of city you belong to, and also upon the income bracket in which you fall.
Tenure of loan is the next most important thing. Most lenders will give you great interest rates with tricky tenure deadlines; this can prove to be more harmful than beneficial. Keep in mind that the tenure will determine your EMI, and the duration of your EMI. It can either make repayment easy and manageable or very difficult and taxing. So pick a bank/NBFC that offers you a transparent understanding of the tenure and EMI.
Unexpected charges are another cause of worry with your lender. Most of these hidden costs might come up during application, sanction, or repayment of loan. It’s always advisable that you keep a flexible space of around 10% in your overall repayment ability and the estimated loan you are applying for, to account for all of the unexpected charges that you might have to pay. However, you can avoid this altogether by simply reading the loan related documents very carefully, before signing it off.
Also make sure to clear all of your doubts and questions before applying for the loan. This will ensure that nothing slips past you and comes around to trouble you later on.