What Do I Need to Know Before Taking a Home Loan?
The factors given here are created to ensure you don’t miss the chance to help you attain your dreams before paying all the money beforehand. Taking a home loan may seem like a complicated process. There are many elements connected to a home loan that you need to be aware of before taking the loan. You will not qualify for a loan if your credit score is poor and your earnings not stable however if you have a strong loan repayment capability, a stable income and a good credit score you can qualify for a home loan.
The factors affecting the criteria of eligibility can begin with calculating the eligibility of your home loan by calculating the EMI. The limits that banks have set is 40% to 50% of the borrower’s income like the allowance dearness and basic salary. The borrower’s history is also considered by banks. 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. People with erratic earnings and whose credit score is poorly found it difficult to get loans unlike people who have a stable income, a good credit score and whose ability to repay the loan is strong. If you have a co-applicant you can easily get a home loan.
Start by knowing the different types of loans your bank is offering. Most banks offer floating interest and fixed interest loans. The floating interest loan is where the interest varies going by the market condition which often leads to EMI fluctuation. The fixed interest loan has a stable EMI, and the interest rate is also constant in the whole time of paying the loan. That is why fixed interest home loans attract a 2.5% high-interest rate, unlike floating interest loans.
No matter the type of home loan you select always remember to negotiate the 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. You could benefit more if you place your application at the end of the most banks work with targets they may consider your home loan application if they want to do business with you.
All the details of the loan are contained in the home loan agreement which is the fine print. Always ensure your EMI is timely paid. Do not append your signature before reading the loan agreement carefully. Be careful about the penalty, hidden charges as well as loan processing fees. You end up in more problems if you don’t fully understand the contents of the loan agreement.