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5 Steps to Consider Before Taking Home Loan

Have an idea about maximum loan eligibility

The amount of loan sanctioned is based on income and earlier track data when it comes to repayment of the loan and credit card dues. One can receive eighty percent of the property value as loan, subjected to the income. The home loan agents generally take an account of the income heads which can be employed to pay back the loan. There is always a difference in the amount quoted in their website and actual amount received after submitting the application.

Keep a track on CIBIL score

Loan eligibility depends on the credit card worthiness of an individual. Credit Information Bureau Limited (CIBIL) has provided a credit scale varying between 300 to 900 rating depending on earlier credit card usage, maintenance of bank accounts, bouncing cheques, prevailing loans, uninsured earlier loans, repayment of loans and number of times applied for a loan or credit card etc. CIBIL score above 700 are more positively to obtain the home loan.

Focus on the interest rate

Rate of interest has direct influence on the monthly EMIs. It is essential to know the difference between fixed and floating rate home loan. In fixed home rate, the EMI remains constant throughout the tenure of the loan. It is beneficial only when there is a rise in the interest rate. In case of floating rate home loan, the EMIs are subjected to change, depending on the movement of base rates. Floating rate home loans are preferred when the interest rates are expected to come down in near future.

Duration of loan

The EMI is estimated depending on the home loan amount, interest rate and the duration of the repayment. The EMI is inversely proportional to the duration of the loan. The greater the duration, the lesser will be the EMI and vice versa. Also, the interest rate is directly proportional to the loan duration. The maximum duration may lead to higher total interest. It is always good to analyze the available surplus falling under various scenarios and calculate the available monthly surplus under each scenario.

Always read the entire document carefully before getting into the deal

Don’t ever blindly sign on the dotted lines. Always read the document carefully and make sure that the terms and conditions are same as what you have negotiated and finally decided. Make a note on the various applicable charges. It is significant to focus on the processing fee, late payment fees etc…

One should follow these instructions carefully to avail the best deal.

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