Buying your own abode is a goal most of us aim to accomplish. Staying in a rented house can never give you the sense of pleasure that your own property can.
But before you set out to buy a property, there are certain things to be careful about. What if you have the resources to pay back the loan via EMIs but may still not be eligible to take home loan? Additionally, what if your poor credit score is likely to impose a higher interest burden, thus pushing the EMIs upward.
And if all is set for you to raise a home loan, then you must be careful about the following factors before you sign the dotted line and become a borrower for many years, if not decades, to come.
Before you raise a home loan, make note of these factors
1. Documents needed: You need to have all the required documents such as proof of income to be able to process your loan. If you are a salaried employee then your joining letter, past three months’ salary slips and Form 26AS would be required for the bank to process your application.
2. Tenure: The loan tenure is an important factor that will determine the amount of EMI (equated monthly instalment).
For instance, when your tenure is 15 years for a loan of ₹10 lakh (at the rate of 9 percent interest) the EMI would come to around ₹10,143. This falls to ₹8,997 when the tenure is 20 years.
3. Equated Monthly instalment: Make sure you have a regular income to take care of your monthly cash outgo failing which, the lender could take possession of your asset in order to recover the dues. So, it is advisable to keep the EMI amount to an affordable level so that you can repay the loan easily.
4. Loan amount: Determining the amount of loan is another key factor for the borrowers to deliberate over. For instance, smaller the loan amount, the bigger the EMI, and bigger the loan amount, the smaller the EMI.
5. Home first or loan first: Some banks give the option of giving a pre-approved offer. So, in that scenario, one can first get the loan and look for a property within that budget. Conversely, one can first look for a house as per their preference, and then arrange a loan.
6. Eligibility: Each bank lists out the eligibility criteria for availing a loan. So, at the outset, the borrower should check the eligibility criteria based on the age and limit of loan given on the lender’s portal before going ahead with the application. This can save a lot of time and effort.
7. Prepayment charges: With the passage of time, the borrower may want to prepay the loan. So, it is vital that you check the prepayment charges before you zero in on the borrower.
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Published: 18 Dec 2023, 03:58 PM IST