How Home Loan Will Help You To Achieve Your Housing Dream?

If the rising real estate prices are stopping you from buying your dream home, a Home Loan is the best option to finance your home buy. Each one of you dream to invest in a home and financing such a huge investment is made possible with a Housing Loan. Choose the best Home Loans that offer you the lowest rate of interest along with flexible options to transfer or prepay the outstanding balance without penalties.

A Home Loan is the most easy option to fund your dream home purchase. A Housing Loan is secured and you can apply for Home Loan with banks and NBFCs. The primary criteria that helps you decide the choice of lender is the interest rate. Housing Loan interest rates vary between lenders. The same lender can charge different interest rates to different customers. This is because lenders fix the interest rates based on your credit score. If you, as the borrower enjoy a good credit score, over 750, you’ll get guaranteed approval. Plus, you can also bargain for a lower rate of interest.

How Much Home Loan You Can Get?

The amount of Home Loan you can avail depends on your eligibility.  Your income and repayment capacity are considered for the purpose of determining your eligibility. To verify your Home Loan eligibility, you can make use of an eligibility calculator. This calculator is available online. In addition to your income, other factors that affect your loan eligibility include:

• Your age
  
• Your credit score
  
• Your credit history
  
• Your salary
  
• The number of dependents
  
• Other financial liabilities
  

All the above factors are taken into consideration to determine how much Home Loan you’re eligible for. In most cases, lenders disburse Home Loans to the extent of 80% of the property value. In exceptional cases, lenders offer 85% of the property value as financing as well.

Compare Lenders

Once you know your Home Loan eligibility, the next step is to compare the interest rates and loan terms of different lenders. While all lenders offering Home Loans have to fix their interest rates based on MCLR, the interest rates differ due to variation in the ‘spread’. Plus lenders also levy other charges on Home Loans like processing fees, verification charges, prepayment charges, service charges, and others. These too add up to the cost of your Home Loan.

To make sure that you avail the best housing loan in India, do your homework thoroughly by comparing the interest rates and terms of all possible lenders.  Also decide if you want to go in for a fixed interest rate loan or floating interest rate loan. While many borrowers choose floating rate loans, it can prove to be very costly, with spikes in the interest rate in the future.

Calculating the EMI

The Home Loan that you borrow is repaid in the form of EMI. Right at the time of availing the House Loan, you decide the loan tenure and the rate of interest. Based on the loan amount, loan tenure and rate of interest, the EMI can be calculated using a Home Loan EMI calculator. A smaller loan tenure will have a higher EMI, thus stressing your monthly finances. A longer loan tenure will be easy on your monthly budget because of a lower EMI. But the flip side is a high interest outflow.

Before you decide on the terms of the Home Loan, estimate your expenses to ensure that the EMI fits in your budget. This will ensure that you don’t default on EMI repayments. Such defaults can affect your credit score adversely.

Documentation

Once you’ve chosen the lender and determined your Home Loan eligibility, make a Home Loan application along with the following documents.

• Proof of your age and address
  
• Proof of identity
  
• Bank statements of the last 6 months
  
• Payslips and Form 16 issued by the employer (in case of salaried) and audited financial statements of the past 3 years and income tax assessment orders (in case of self-employed)
  

After the lender is satisfied that you’ve satisfied the eligibility criteria and have submitted the necessary documentation, your Home Loan application will be processed and approved. With the funds made available, you can realise your dream of owning a home.