Purchasing your dream home is one of the biggest financial decisions that most people make in their lives. It requires a huge amount of savings to invest in a property. If you want to own a house but don’t want to exhaust all your life savings, you can opt for a home loan.
Availing of a home loan requires you to plan carefully by analyzing all the related aspects. If you are unaware of all the formalities you need to fulfill to get your home loan approved, you should first research the different plans.
You need to know the basic components of the home loan before selecting the right kind. Here are a few things to consider before you apply for a home loan:
1. Credit Score
Note that credit score is one of the most important and essential factors which banks consider before providing a loan. So, if you desire to apply for a home loan, you should have a good credit score. Generally, it is also an essential requirement to apply for any loan within the banking sector. Ideally, it is imperative to have a credit score of more than 750 to avail of a home loan and earn better rates. Thus, it will be beneficial for you to make timely payments for your credit cards and existing loans without fail before applying for a home loan.
2. Loan Interest Rate
Before you opt for any bank, you should check and consider several banks’ home loan interest rates. Comparing the different rates of interest offered will help you find the most suitable deal. But before that, you should be aware of the different types of interest rates that are available. Generally, there are two rates of interest- floating and fixed. Under the fixed home loan interest rate, the EMI’s do not vary over the loan tenure. You can opt for the fixed interest rate using the home loan EMI calculator on the bank’s website. The floating rate of interest, on the other hand, depends on factors and changes over time. You can select either depending upon your requirement.
EMI is the payment that you make every month towards repayment of the home loan. This installment amount depends upon your choice as well as the down payment that you make at the time of buying your home. With more down payments, there will be lesser stress of making the outstanding amount, further converting into EMI’s. It will be wise to prevent your EMI amount from exceeding 45 percent of your total income. Use a home loan EMI calculator to plan your finances accordingly.
4. Tenure of Home Loan
If you want to avail of a home loan, it will be beneficial to decide the loan tenure before opting for one. The home loan EMI’s directly depend on your home loan tenure. Most banks tend to prefer home loan applicants with a shorter repayment period. You can calculate your EMI’s using the home loan EMI calculator and evaluate your tenure.
A short repayment period will also benefit you as it decreases the home loan interest burden on your EMI’s. Even though a shorter tenure will increase your monthly installments, it will help you decrease your home loan cost.
5. Processing Fee
The banks charge a processing fee for home loans. You need to pay some amount to the bank once the home loan application is accepted. Most banks charge a loan processing fee of up to 1 % of the home loan they may disburse. Thus, it would help if you searched for the right bank that charges a low or negligible processing fee or charge. Sometimes banks charge additional expenses at the time of application. It will be wise to discuss these charges with your preferred bank beforehand.
Considering these crucial things will enable you to get your dream home with ease. The best way is to research and compare various plans. You can use the home loan EMI calculator and plan accordingly. To get a clear understanding, you can opt for reputable banks like Axis Bank. They offer smaller EMI’s and no pre-payment charges. To know about the home loan in detail, visit the website today.
HussaiN is a full-time professional blogger from India. He is passionate about content writing, Tech enthusiast & computer technologies. Apart from content writing on the internet, he likes reading various tech magazines and several other blogs on the internet.