5 Important Steps to Consider Before Taking Any Home Loan

Here Some  Important Steps to Consider Before Taking Any Home Loan.

1. Get to know your loan eligibility 

The maximum loan eligibility depends on your income and previous track record. They check your previous track record in terms of repayment of previous loans and credit card dues. The home loan can go up to 80% of the value of your property subject to your income. Coming to your income criteria, they do not calculate some of your salary slips while calculating the income. They only calculate the income heads which can be used to repay the loan amount. This is the reason you find a difference between the amount showing up on the website and the actual loan amount which sanctioned once you applied.

2. Cibil score 

Credit information bureau ( India) Limited provides a credit score depends on the credit history found in the CIBIL report. It is depends on previous credit card usage, existing loans, check bounces, loan repayment and the maintenance of your bank accounts. The cibil score is 3 digits number which varying from 300-900. The closer your score to 900, the stronger your credit card profile. You have to make sure to purchase your credit card score prior to applying for your loan amount which will help you to understand what the lender will review while analysing your application.

3. Types of interest rate

You have to choose the type of interest rate wisely because which has an impact on the monthly EMIs you are going to pay. You should always understand the different between fixed home loan and fluctuated home loan.Fixed interest rate means repayment of loans in fixed installment over a entire period of time. Which will not change with market fluctuations. It is useful if the interest rate is expected to rise in the near future. Floating interest rate means repayment of loans depends on the market condition. These loans tied to a base rate and have a floating element. If the base rate varies then the floating interest also varies. It is useful if the interest rate is expected to fall in the near future. Fixed rate home loan is always 1-2.5% points higher that floating rate home loan.


4. Loan tenure 

Loan tenure has an impact on the EMIs you pay. Monthly EMI is calculated based on Total loan amount, home loan interest rate and the loan tenure. The monthly EMI is inversely proportional to the loan tenure. If the long tenure is high which lowers the monthey EMIs ,the shorter the loan tenure the longer the EMIs. The total interest paid is directly proportional to the loan tenure. The higher the loan tenure, the higher the total interest paid and Vise versa. It’s always advisable to know the impact of your EMIs before you deciding the loan tenure.


5. Go through the documents carefully before sign

Always recheck the documents and make sure that that the terms are same as what you have negotiated and agreed upon. Read the documents carefully to know the different charges applicable and feel free to clear your doubts before sign the documents.

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