Home Loan Rates 2018 568 views
Taking a home loan is a big decision and you should not take this decision in a hurry. If you are all set to buy a property and made up your mind that you want to apply for a home loan to buy your dream home, get ready for a roller coaster ride of home loan. You need to take many precautions and learned steps to take the right decisions at the appropriate time. You should not apply for a home loan because your family or friends suggested you to get a home loan forehand. Rather, you should apply for a home loan to meet your financial requirements and buy your dream property.
Buying a home is not a simple task and even applying for a home loan is cumbersome. You need to spend months and months to get everything streamlined and prepare for that big day. Take out some time to find out your actual requirements and what kind of property you want to buy? Are you looking for an expensive home or you can compromise with smaller home within your budget. How much money you have in savings and how much you want as loan? Are you eligible for home loan? If you have answers for all above questions, then you are all set to start your home loan journey. But before you make a move, you should do some preparation work and some background work to avoid hassles in your home loan process. Here we are discussing some common mistakes one should avoid while taking a home loan.
Finalising the lender first: While you start thinking about buying a property and you don’t have enough funds to pay the amount, the most common thing, which everyone wants to know is how much amount of loan they can get or what is their eligibility? There is nothing wrong to know your eligibility amount. If you are below the age of 40 years and have a good income with minimum financial liabilities you are eligible to get four times amount as loan. But it is not a necessity that you book your lender at the same time.
Most of the banks provide loan for ready-to-move-in property and even for under-construction properties with renowned and approved builders and projects. But if the property is unapproved or unauthorised there are chances that bank will reject your application. If there is any legal issues with the property there are chances that bank will reject your application and refuse to give loan. Therefore, it is best to select a property first, check all legal documents related to your property and authorisation and then apply for a loan. This will give you the clear picture of your loan eligibility. At times, if bank is not satisfied with the property location and as per the market price evaluation, it will revise the amount and pay you lesser amount. If you will receive the lesser amount after selecting the property, it will be more complicated for you to arrange the remaining funds.
The best solution in this situation is first find a property after that search a lender for loan. You can also ask the property agent to help you in finding the lender. Banks always like to disburse the amount to those customers who have already finalised their property before applying for the loan.
Not ready with enough amount as down payment: This is another common mistake people do at the time of applying for a loan. Generally, people assume that they will buy an under-construction property and they can pay the down payment proportionately as the bank will pay the maximum amount. Most of the lenders ask you to show the details of your savings and funds before lending you the loan to check your eligibility and whether you have enough money to make the down payment or not. In case, if you are going to borrow the money from your family or friends, they might ask you to give the details of how much amount you are going to receive.
The best mantra to get the maximum amount at a competitive rate of interest is negotiate with the bank. The cost of your loan depends upon your ability to negotiate. The interest rates of home loan in most of the cases set on your repayment capacity. Besides, you can also negotiate on the processing fee, legal fee, other hidden charges and cost, free valuation of your property and free documentation. You can save your money if you can negotiate well with the bank and get a loan at lower rate of interest.
Choosing between fixed or floating: You can avail a loan on fixed rate of interest or floating rate of interest. As the terms suggest that fixed rate of interest remain unchanged irrespective of the changes in the rate of interest in future years. Floating rate of interest suggests that rate of interest will change if the RBI will make changes in the interest rates.
If you are taking the loan for a shorter duration such as for five years or seven years, it is good option to choose a fixed rate of interest. But if you are going to repay the loan in 20 years or more then you should take a loan on floating rate of interest as you can’t predict the changes for such a long duration. While choosing a bank for floating rate of interest go with the bank which deals with base rate as it will be more transparent than the process followed by those who don’t tell you the base rate of the loan.
Not buying any life insurance policy: While taking a home loan it is equally important you buy a life insurance policy or a health insurance. In case of any medical emergency you need not to get worry about arranging the money for your medical emergencies. In case of your accidental death, your family will not bother at least for other expenses as there is a policy amount to take care of the rest in your absence. So get yourself insured if you are planning to take a home loan.