Points to Check While Considering a Home Loan - Raja Housing Trends

With the real estate market going in an upward stride, the housing loan has become the most followed trend in the lending section. This type of loan serves the need of the middle-class people and aids them in owning their dream home. So, this article is intended to those who opt for home loans and aims to guide them to take the right path while choosing a home loan.

Below mentioned are some of the checklist that one should consider while opting for a home loan:

What are the criteria to avail home loan?

To avail home loan certain banks and lenders have some standard criteria and if one meets all this criteria, banks and others financial institutions approve their required amount through loan. Though, these criteria many change from banks to banks, but still there are few basic criteria that every financial institutions look for and they are:

·         A secure reliable source of income irrespective of salaried employee or self-employed

·         A positive credit score for at least 6 months with active bank transactions

·         Age criteria, for salaried employee should be between 21-60 years and for self-employed it is 21-65years.

Most of the loan seekers are confused that the lender with provide them with the entire amount that is required for the purchase of their home. But, the assumption is not right; all the banks and financial institutions will provide 85% of the cost of the property, which one wants to buy and the remaining 15% should be arranged by the buyer itself and should also be ready with other costs separately like the stamp duty, registration charges, brokerage fee etc.

Check your eligibility?

Before getting depressed that the bank didn’t approve your loan, as the borrower is not eligible, take some time for yourself and check your eligibility and calculate your eligibility based on the below points:

·         Your total income

·         Overall obligations like financial commitments such as car loan, personal loan or another loans.

·         In case your spouse is also salaried employee or has any other income source, he/she can be included in the loan process as a joint applicant as this will increase your eligibility for a higher loan amount

How to calculate interest rate on your home loan?

Interest rate is a certain amount charged by the bank or financial institution on the approved loan amount and this rate varies from bank to bank and lenders as well and also depend on the EMI.

Know about different types of interest rates like the fixed rate, floating rate, and reducing balance and how it is applied and how you will benefit from it. Research thoroughly about all the charges included under loan processing, be sure about the processing fee, commitment fee and admin fee and this will be deducted from your loan amount. Before blindly approaching any bank or institution, as a borrower, it is better to study well about which bank is offering good discounts and rate of interest that is right for you.

Documents to be furnished for home loans

Below mentioned are the list of documents that one should be ready with while planning to take home loan.

·         Address Proof

·         Proof of your Age

·         Copy of your PAN Card

·         Passport Size Photographs

·         Last 6 months bank statements

·         Last 6 months salary slips for salaried persons

·         Form 16 for the last 3 years for salaried persons

·         Copy of the Property Title Deed

·         Copy of IT Returns of last 3 years for business-people/self-employed people

·         Copy of audited Balance Sheet & profit and loss (P&L) statements of last 3 years for business-people / self-employed people

What is a pre-payment?

Borrowers should also check for pre-payment options, Pre-payment is an option where the borrower can pay the lender the complete amount before the EMI period and can close the loan. So, it is advised to the borrowers to keep pre-payment option as an important requirement as it will save you from debt burden and will give you the pride of ownership.

What are the tax benefits on home loans?

The tax-benefits is really a big relieve for the borrowers who opt for home loans as they can claim both the interest and principal amount of their repayment of loan during that financial year.

To avoid any confusions and future complications, while availing home loan it is always better to do a research about the financial market and then to decide which the right bank or financial institution and interest rate that suits you better.