10 Points Every Borrower Must Consider Before Availing of a Home Loan

Everybody wants to boost financial immunity by investing invaluable assets. Property is a kind of asset that can be beneficial in the long run. Whether you are in quest of a new home or want to buy property for investment strategies, the banking institutions always provide you with lucrative loan opportunities. While you don’t have enough money or are not ready to liquidate your reserves, banks will act as the savior to help you purchase your dream home. Before applying for home loans, check some of the essential tips that can simplify your loan application and repayment.

1. Opt for Affordability

Since there are multiple loan options available, you first should consider affordability while opting for one. You have to decide on your loan options so that you can easily afford the fixed EMI and comfortably lead the standard of living.

To confront unforeseen challenges, you should get access to steady monthly earnings and consider additional overhead expenses. Therefore, whenever you choose a home in a preferable location to purchase, make sure you can have the affordability to repay your loan on time.

2. Do Thorough Research on the Available Home Loan Options

In this era of digitalization, it seems easier to browse the internet and do your research to check on the available options. While you opt for market research, consider some crucial factors like EMIS, down payment, and repayment time to decide on the most suitable lender.

You always should choose a lending organization that provides you with a home loan at the most attractive interest rates. Since home loans are massive, you must gather all the detailed information before applying to prevent unnecessary hazards.

3. Keep Maintaining a Good CIBIL Score

A credit score plays an important role in getting your desired loan from banking organizations. Be regular in repaying your loan amount or credit card dues. This will help you have a good CIBIL score. If you can maintain a credit score higher than 750, you are more likely to get home loans at attractive interest rates. Along with this, you will widen your path of enjoying a speedy loan processing and disbursement.

4. Read the Home Loan Agreement Carefully

Look through the documentation cautiously so that you can comprehend the application well. If you want personal assistance, you will get that facility while seeking an HDFC home loan or the same from any other loan lending organization. It is worthwhile to read the documents mindfully and sign the papers for mental satisfaction. This will also ensure deep-rooted mutual trust in the loan-providing banks.

5. Loan Processing Fees

Processing fees are the charges that every home loan borrower needs to pay to the lending institution after the approval of the home loan application.  Usually, most of banks or financial institutions ask for 1% as the loan processing fees before disbursal of the loan. It is important to search for the right bank that asks for low processing fees or charges nominal processing fees.

6. Manage Your Expenses

One crucial factor that instantly follows the affordability clause is of monthly expenditures. Once you start repaying the loan, it is important to follow a strict budget in order to fulfil the money required for the instalments. It is crucial to be regular in repaying the EMIs to maintain credibility and avoid an overdue or hike in interest rates.

As spiralling down the non-repayment of the home loan is very common, you should avoid it by channelling the resources towards regular and timely reimbursement to get complete ownership of the property.

This clearly suggests spending with the utmost attention and delaying any non-immediate consumption. Having a controlled outflow of income will help you pay off the debts within the set time frame and even before that.

7. Understand the Home Loan Tenure of Reimbursement

The time you need to repay the sanctioned loan is considered the repayment tenure or period. Both the tenure for the repayment and EMIs go hand-in-hand. If someone chooses a longer tenure, then there will be a smaller EMI amount. At the same time, it also increases the overall amount of money to be levied. Eventually, you will end up paying double or triple the amount of the loan simply because of the high rate of interest.

In case you have a stable or recurring income, then plan for a strict budget. It is always suggested to choose the shorter tenure for loan repayment and with higher EMIs. It is because interest rates for such tenures are low and mainly intended to motivate the concept of faster repayment. Banks are also offering a lucrative interest rate for all those looking forward to having a short cycle for repaying the loan.

8. Get Familiar with the Foreclosure Norms

As we all know, foreclosure is a concept where the borrower makes the remaining/outstanding amount of the loan before the commencement of the tenure to close the account. It is said that the sooner you repay the outstanding for the home loan, the lesser interest you will have to pay.

Usually, banks or home loan lending institutions levy a foreclosure penalty for repaying the home loan in case you choose to close the account before the commencement of the tenure. But in case you have a floating interest rate for the home loan, the bank or the financial institution will never charge any penalty for foreclosure.

9. Get Insurance Cover

It is crucial to purchase a loan cover term assurance plan in order to cover the loan amount. It is crucial for you to do proper research work to find the best home loan cover options available. This will help your family and provide a sense of relief from the burden of repaying the outstanding loan in case of any mishap or unfortunate series of the incident.

We all must be prepared for everything because life is very uncertain. No one knows what exactly will happen the next day. Nowadays, most of the home loan lenders insist or have made it compulsory to have a home loan cover in the form of insurance.

10. Maintain Caution in Monthly Expenditure

When you have been accountable for loan repayment, it is recommended to comply with a strict budget so that you don’t face any difficulty paying the instalments. To avoid overdue or maintain utmost credibility, you must maintain regularity while repaying the loan amounts.

Financial experts always advise spending purposefully and postponing unimportant purchases. Once you grow the self-control over the drainage of income, you would better pay off your money owning at the earliest.

The more you consider the abovementioned points, the greater your loan application process will be simplified.

So, these were some useful tips or pointers that every borrower must keep in mind before having or applying for a home loan. If you are not sure about all the clauses or how the system works, make sure to get assistance from professionals to understand things better.

You will have to get it very clear whether you will be able to repay the instalments regularly every month after the disbursal of the loan amount. Hope the discussion was helpful and will help you to make an informed decision. Please feel free to share your queries or any suggestion regarding the pointers below in the comment section.