Factors to Consider Before Taking a Home Loan
The factors given here are designed specifically so that you don’t miss the chance to achieve your dream before paying all the money beforehand. Prior to taking a home loan the process may seem complicated. You need to know some elements of a home loan before applying to get one. If a person’s income is stable, their repayment capability strong and a good credit score it is much easier to get a home loan unlike those with poor credit history and erratic earnings.
One main factor in the home loan eligibility criteria is to calculate the home loan eligibility through EMI calculation. Banks normally have a 40% to 50% bank limit of the income of the borrower like the basic salary and allowance. Banks also consider the credit history of the borrower. You will be required to pay a high-interest rate, and your amount will have to be reduced in case you have a poor credit score and if you have an existing loan. Individuals who have a good credit score, strong capability of repayment and stable income find it easy to acquire a loan, unlike people whose credit score is not good and whose earnings are erratic. If you have a co-applicant you can easily get a home loan.
You should know the types of loans that your bank is offering. There is the floating interest loan and fixed interest loan. The floating interest loan is where the interest is not fixed and is linked to the market conditions that mostly leads to a fluctuation in the EMI. The fixed interest loan is where the interest is constant and the EMI to be paid is constant throughout the loan repayment period. It is no wonder that fixed interest home loans have a high-interest rate of 2.5%, unlike floating interest loans.
Regardless of the home loan you select to ensure you negotiate your interest rate. You will need to haggle with the banks since they normally have a set edge, but you can argue based on being their loyal customer who has an account with them. You negotiate better if your credit score is good. If you apply for your home loan at the end of the month, you can greatly benefit especially since banks work on targets meaning they can be versatile during the end of the month for business.
The fine print is the Home loan agreements are legal documents with all the loan details. Always ensure your EMI is timely paid. Carefully read the loan agreement before sign it. Be careful about the penalty, hidden charges as well as loan processing fees. Understand the contents of your loan to avoid problems in the future.