A Beginners’ Guide to Securing an Affordable Home Loan

by Kevin Smith Author

Everyone wants to find their dream home, and most people do whatever they can to make ownership a reality. But even after working day and night, some people fail to buy the house they have been planning for so long. But that doesn’t have to stop them. There are other ways to bring the dream to life.

Loans are an alternative to which most buyers turn. A loan allows them to borrow some money in exchange for security and return the principal along with interest in installments. But it does take some planning and organization.

To get an affordable home loan, one needs to find a reliable and trustworthy lender. And there will be a lot many options in the market to choose from, which will be quite daunting for first-timers. They may also be anxious about many factors like the interest rates, the loan amount, margin, etc. Not to mention, a home loan is a long-time commitment, which often stretches up to thirty years.

We’ve come up with an essential guide and tips that you can follow to ease your anxiety around home loans.

Evaluate Your Financial Status

Watch out for your financial health. It is the first thing you must do before buying a house. However, most of us ignore this fact and jump on the search process through property listings and select our dream home. This might be necessary, but it is not ideally the first step. Begin with a systematic evaluation of your financial stability and then ascertain whether you can afford to repay the EMI of the loan. Consider all your savings and see if you have enough money to make a down payment. Continue to save for emergencies, because they do happen.

Shop Around

The best deals don’t come to you. Instead, you need to get out and shop around to check for the interest rates that are offered by various lenders. This way, you can compare the benefits, including those from interest rates, and make an informed decision. Use a home loan EMI calculator and calculate the EMI amount to see whether you can afford it.

Leverage Affordable Housing Schemes

The best thing about housing schemes is that they come with several subsidy offers; thus, loans are available for people who have only limited finance. Keep a close eye on the regular updates surrounding such schemes and leverage the one that is the best fit.

Save for a Down Payment

Make sure you have enough money to meet the down payment needs, while also putting some away for emergencies. Note that down payments often range between 10 and 25 percent of the property. Keep enough margin to cover all possibilities.

Avoid Longer Repayment Terms

If you think a longer repayment term will reduce the burden of high EMIs for you, you are certainly correct. But that will also augment the interest rate in the long run, so choose a term that is comparatively shorter, while still being affordable to repay.

Buy within Your Budget at a Convenient Location

Many people get carried away by the flashy interiors and exteriors of a property and end up purchasing a home that is beyond their budget. The house you choose should be priced reasonably, so you don’t strain your wallet trying to make repayments. A convenient location is imperative, as is hiring a reputable builder. Factor the latter in, because lenders assess the builder’s reputation before lending any money.

We all hope to spend our lives in special homes, making eternal memories. But when we get carried away and in too deep financially, it can do more harm than good. Following the above commonsense guidelines is a way to smoothly navigate your loan process and cover all your bases when it comes to repayments.

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Created on Aug 18th 2021 04:53. Viewed 239 times.

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