Well! It is the dream of every one of us to purchase a dream house once in a lifetime however, in today’s era the price of the properties are skyrocketing and hence, people have problems in purchasing the house. In order to facilitate people purchase a house, the banks and financial companies under both public and private sectors lend loan to the borrower.
With plethora of options available to borrow a home loan, the normal person is tremendously confused. Thus, in order to clarify all your confusions, herein, we bring up a simple guide to help you borrow a home loan and fulfill your dream of having a luxurious house ahead.
- File your ITR regularly. Well! Filing your Income Tax Return helps you build up your CIBIL Score. A CIBIL Score of 750 is desirable in the case, you want a loan. If your score is low, many banks and financial companies avoid giving you a loan or they might prefer to give you a loan at a higher interest rate.
- You must research for various options available which can provide you a loan with effective interest rates. Apart from this, it is also essential to gather information about the postulates of loan agreement and their foreclosure norms.
- Understand the fundamentals of interest rate. Notably, there are two kinds of interest rates: floating interest rate and fixed interest rate. Floating interest rate depends upon the stock market whereas the fixed interest rate remains same till the foreclosure duration whether it is 15 years or 20 years.
- Comparison of the involved processing fees is essential. Yes, it is quite necessary to know the details regarding the processing fees, file charges etc involved while the loan is being processed. It is variable for different banks and financial companies.
- Check your affordability criterion. Before finalizing your loan, it is necessary for you to counter-check your own affordability criterion as your bank/financial company does. Well! Practically it is extremely difficult to repay the loan in the case, you can’t afford it. Thus, decisions should be made wisely.
- Insure your property. Insurance of your property which is supposed to be mortgaged for a home loan, ensures the option of repayment in the case you won’t be able to do the same because of certain adverse circumstances. Hence, insuring your property is an intelligent idea.
- Don’t depend on your loan agent. All the loan agents tend to sell the loan for the bank/financial company that pays an effective incentive to them. Notably, if the cost of commission is high, your processing fees and interest rate is also comparatively higher. Thus, you must not depend upon the loan agents and try at government banks for loans.
- Ensure the legality of your property. Yes, you must check all the legal papers of the property which you are planning to buy. After all, if you are leaving no stone unturned to purchase your dream house, your property should not be illegal or else, you will be at loss and no bank would prefer giving loan for a property with illegal issues.
- Make appropriate down payments. Along with the legal documents of the token money and down payments, you must try to make maximum down payment. In this manner, you will be able to timely foreclose your loan, thereby, reducing the interest on your loan amount.
- Spend conservatively to foreclose your loan before time. This ensures reduction in your compound interest thus, saving your money a great deal. It is also found that foreclosure norms are now relaxed and the borrowers don’t require paying extra if they wish to foreclose their loan before time.
Hope this is an interesting and informative article. Well! Now if you are planning to purchase your dream house, you can apply for a home loan to combat the high expenditure involved thereby, maintaining your budget.
Best of Luck!
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