Acquiring your “Own House” is an important decision that requires a lot of research and planning. Buying a home being one of the biggest investment, most of us require significant capital to start with. One of the most common steps taken by prospective home owners approach financial institutes, banks and private funding companies for home loans to make their investment manageable. Home loan reduces the burden of paying the entire property value in one shot and also does great help on tax saving. These institutes offer flexible interest rates and different budget options that can be picked accordingly. However, it is necessary to approach the right bank or financier to save money.
What is Home Loan?
Home or House Loan in simple terms is offered to an individual who wants to buy or build a house by any bank or financer. That particular property will serve as a security for the lender till the buyer repays the loan. Loan lender can retrieve the amount by selling the property if buyer failed to pay the loan.
Requisites for Home Loan:
- Banks generally gives the loan amount 60 times of your net monthly income.
- Precise documentation is required. (like address proof, ID proof, Tax Papers, Salary slip, work experience paper, other current loan details, etc.)
Top 5 Criteria to consider when approaching for Home Loan:
Whether you approach a bank, financial institute, private lender or a builder who have tie up with banks, you must make sure that the lender is reliable. Any reliable lender will offer required flexibility and clear answers when it comes to terms and conditions of home loan in India. Try to approach more than 5 lenders before making the right decision.
Percentage of Loan:
Best home loan in India can be chosen based on the percentage of loan offered. If a bank is approving 70% of home loan amount, then check for other banks that can offer 80%. This is helpful if you cannot pay more of down payment and prefer paying the amount in EMI.
Compare Interest rates and Processing Fee:
Select the lender that offers lower interest rates and 0% processing fee to save on home loans. Calculate the interest rates and EMI using loan calculator before finalizing. However, the rate of interest varies based on quantum and period of the loan taken.
Prepayment Fee and Customer Service:
These days smart paying options are available with many banks, wherein you are allowed to pay a part amount of loan before closure to reduce EMI. Choose a lender that has no or minimum charges for foreclosure and is also great in customer service when needed.
Processing Time and Speed:
Dealing with financer or bank that rules in quick processing and disbursal of loan will be beneficial in long run. Consider 15 days for processing and additional 5 days for disbursal after the amount is sanctioned.
Some institutes have special schemes for women, senior citizens, joint loan and hybrid loan. You can save minimum 2% on interest if you fall under any such special schemes. Almost all institutes have special schemes during festival season, so do a detailed research and take a wise decision.