For most aspiring homeowners, buying a property means procuring some extra finances. Taking a home loan is one way to go about it. However, in a vibrant market like India, there are simply too many options. Not to mention different interest rates, repayment terms, and loan features. Sifting through all this can be quite a task, but finding the best deal can save quite a bit of money. Aspiring homeowners need to understand the parameters by which they can assess and find the most suitable loan for their specific requirements.
Understanding Home Loans and Their Features
A home loan is the money individuals borrow to purchase or construct a home. The loan amount is repaid over a period of time, with interest, through Equated Monthly Installments (EMIs). In India, property prices are invariably on the rise, and the sums involved are quite high. Here are some features borrowers can consider when looking for home financing:
- Loan Amount: Clearly determine how much money is to be borrowed. Check if that amount is available to you.
- Method of Application: Banks offer different loan amounts for different application procedures. For instance, ICICI Bank offers home loan up to Rs. 5 Crore* online with competitive interest rates starting at 8.75%* p.a. for customers with a pre-approved home loan offer. Loan hopefuls looking for higher sums can apply for a loan up to Rs. 30 crore and more through the bank’s other application processes. *T&Cs applied
- Repayment Period: Choose a repayment period that best suits your finances. Use the bank's online Home Loan Calculator to see how different repayment tenures affect the EMIs. Tenures can range from a few years to decades.
- Interest Rates: Look up and compare current home loan interest rate in India from different lenders. Once you find a couple of good offers, check if you’re eligible for them. Take time to shop; this can significantly impact the total cost of the loan.
Dos and Don'ts of Home Loans
Here are a few checkpoints to keep on track:
Dos:
1. Investigate Loan and Property Details Thoroughly: Get all the details on the property you intend to buy, check the developer’s track record, and ask around. Then, be clear on the loan terms. Make sure there are no hidden charges or other potential costs.
2. Plan for Unexpected Expenses: Few can boast of keeping things within budget when it comes to homes. It’s always a good move to keep a buffer for unexpected costs that may arise during the loan tenure.
3. Keep All Necessary Paperwork Organised: Ensure all required documents are in order for a smooth loan approval process.
4. Don’t Ignore Your Credit Score Before Applying: A good credit score will certainly help in getting better interest rates and loan terms.
5.
Use a Home Loan EMI Calculator: Leading banks such as ICICI Bank provide
Home Loan Calculator. Use them to determine the cost of the loan. The calculations may not include other potential costs, so read the terms and conditions.
Don'ts:
1. Avoid Applying for a Home Loan on Multiple Aggregator Sites: This can negatively, even if temporarily, hurt the credit score and harm the chances of loan approval.
2. Refrain from Carrying Multiple Loans: It’s advisable to tackle one loan at a time. Also, having multiple loans is unfavourable for creditworthiness.
3. Avoid Overspending on Credit Cards or Delaying Loan Repayments: This can have a negative impact on credit scores.
4. Don't Commit to a Home Loan Beyond Your Means: Ensure the loan amount is well within your means.
Use a Home Loan Eligibility Calculator
Home loan providers also have eligibility calculators that determine the loan amount a borrower can get based on their income and other factors. This helps borrowers understand their loan eligibility instantly.
How to Use Home Loan Eligibility Calculator?
- Enter monthly income.
- Include any ongoing EMIs.
- Select your desired tenure.
- Enter the interest rate.
- Click 'Calculate' to see your loan eligibility.
- Adjust variables to explore different scenarios
Specific Home Loans for Specific Needs
Check if your preferred lender has specific options for your unique needs. Here are some specialised loan types to consider:
- Express Home Loans: Some banks offer expedited processing for faster approval and disbursement. These loans are designed for quick and efficient service, ensuring customers secure their property without delay.
- NRI Home Loans: For Non-Resident Indians, some banks provide specialised home loan products with flexible options and benefits that align with the requirements of NRIs.
- Balance Transfer: If you already have a home loan with another lender, consider transferring the balance to a new lender with lower interest rates or better terms. This option can help save on interest costs and make your repayments more manageable.
- Land Loans: For those looking to purchase land, leading banks offer specific loans for land purchases.
Getting the right home loan will involve careful consideration of various factors- the amount, date of interest, repayment tenure, and other special provisions. Whether you're a first-time homebuyer or someone looking to refinance an existing loan, don’t hesitate to use tools like the home loan eligibility calculator and consider all other variables.
