Factors that influence your Eligibility for Getting a Home Loan

A decision to buy a dream house of your own is very important and a life-altering one. Before approaching to a lender, not only do you have to be adequately prepared, in terms of finances, but apart from this, you have to ensure that the conditions are correct for your home loan at Low-interest rates application to go through smoothly. Some of the factors as discussed could become an obstacle if not taken care of within time.

Image result for taking a home loan

When you apply for a home loan, do not forget to check your home loan eligibility by using a home loan eligibility calculator that works on three parameters- Required Loan Amount, Rate of Interest and Loan Tenure. Home loan is something that you are getting into a long-term financial commitment with your eligible lender. Prior to getting a home loan, put in your best efforts and do your best to prepare in terms of getting your papers in order, getting the funds ready for the down payment. Besides this, your lender may also put you through a rigorous credit score or CIBIL Score assessment process to ensure that lending to you entails the minimum amount of risk.

So, do not forget to check your home loan eligibility before applying for a home loan.

Additional Reading:- Factors that influence your Eligibility for Taking a Home Loan

Advertisements

How to Keep Away from flat interest rate in case of home loan

A home loan is an amount borrowed by individuals from banks or other financial institutions for construction, purchase or repair of a residential property. Lenders give the loan for a fixed period of time and charge interest on the amount borrowed, which has to be paid by the borrowers along with the principal amount. The interest rate on the loan can be calculated in two different ways – Flat interest rate and reducing balance interest rate. A flat interest rate means that the interest component on the loan will remain the same throughout the tenure. The interest will be calculated on the entire principal amount until the tenure comes to an end. It is calculated using the following formula:

Interest Payable per installment = (Original Loan Amount * No. of Years * Interest Rate p.a.)/ Number of installments.

Image result for home loanThe interest payable is generally more when it is calculated using the flat interest rate as compared to reducing balance interest rate. A flat interest rate is a gimmick by lenders to attract customers into taking a loan without making them understand about the entire scheme. Consumers who are in immediate need of money fall for such schemes and end up paying higher amounts as interest. Hence, always ask the lender about the interest rate calculation method before signing off the final loan agreement. You can also spend a little time in the calculation of the total interest payable and choose accordingly. Also, always take into account costs like processing fees when you are comparing loans from lenders.

 

These Points to check before you apply for a home loan

Everyone wants his own dream house but because of the high cost, it is not easy to purchase a home. Nowadays, the cost of homes are very high, requires a one-time huge requirement. You can solve this problem of finance by simply taking a home loan. Nowadays almost all the banks and NBFCs offers home loan at an attractive rate of interest. They offer a number of benefits to attract customers on a large scale. You should check some important points before taking a home loan like you have to do proper research on your own, don’t blindly trust the agents.

Prior research helps you take a decision better way. You should know the difference between the fixed and floating rate of interest. Floating interest rate fluctuates with market economics and interest rates are linked to a bank’s Marginal Cost of Lending Rate or the NBFC’s base rate and the fixed-interest rate brings a sense of clarity when it comes to loan repayment of the loan EMIs. You should check your CIBIL score before applying for the loan. CIBIL score ranges between 300 to 900. 750+ score is considered a good credit score. You should make sure that you will not pay extra charges at the time of foreclosure of the loan amount as RBI banned foreclosure penalties.

Additional Reading:-Points to check before you apply for a home loan

Compare all the rate of different banks and NBFCs and read all the terms and conditions carefully to avoid any kind of fraud. So, these are the thing you should consider before applying for a home loan.

These Factors affect your home loan EMI

Taking a home loan is one of the biggest financial commitments that you make, due to the high amount involved. Hence, this decision should be made after careful evaluation of all factors. The most important factor that you should take into consideration before applying for a home loan is your EMIs.

Image result for Factors that can affect your home loan EMIWhen you are calculating your home loan EMI, ensure your financial life is not adversely impacted due to the home loan. Take into account all the factors that can have a direct influence on your home loan EMI. The first thing that you should keep in your mind is interest rates. If you have taken a home loan at floating interest rate, there would be a change in the EMIs depending on the prevalence rates in the market.

Whenever there is a dip in the bank rates, your EMIs will reduce significantly. Also, they do not involve prepayment penalties. Next is your loan tenure. A change in your loan tenure can have a great impact on your monthly installments. The longer the tenure, the lower will be your EMI and vice versa. Further, it is highly advisable to check the pre-payment clauses with your lender before you sign the loan agreement.

Lastly, home loan borrowers can shift their home loan to a different lender to avail a lower interest rate benefit through a home loan balance transfer. Hence, there can be several factors which may impact your EMI during the tenure of your home loan. Carefully compare all the home loan offers available to you before making your final choice.

ALSO READ: – Factors that can affect your home loan EMI

Reasons to opt for this Housing Loan in this Diwali season

If you are planning to buy a house then the festive season is the right time to loosen your purse strings. Diwali is considered an auspicious time to buy a new thing like a new house. Buying a home is not an easy time task because it requires a huge investment. Diwali is the best time to buy a new home because most of the banks and NBFCs offers Home Loan on various attractive offers like a lower rate of interest, waive off processing fees, longer tenure and number of EMI options and so on.

Image result for 4 Reasons to opt for this Home Loan in this Diwali season

On the occasion of Diwali, salaried people got bonuses, incentives etc and most of the people save in the preceding months in order to be splurge during festivals. People believe the Diwali deemed auspicious for buying a property.  It is not enough to know the best time to buy a home and take the plunge with a herd. The more important thing is to know how to clinch the best deal at the most opportune time and it will be suggestable to apply for a home loan online as it will save your precious time.

Builders also offer attractive offer during Diwali because many new projects are launched during Diwali with a number of attractive offers. So, these are the reasons which suggest that the Diwali is the best time to a new home by taking a home loan.

 

How to Repay your home loan faster

Buying a home is a dream for many of us, but due to the high prices, only a few can afford to pay such a whopping amount. In such situations, buyers turn to banks for home loans. However, opting for a house loan is not that easy as the EMIs last for at least a decade and add to the burden for a majority.  But, don’t worry, we have listed a few tips that can help you to repay your home loan faster. You can opt for a higher EMI. It will help to reduce the loan tenure which means that the total interest that you’re supposed to pay to the lender also goes down. Further, home loan buyers also have the option to prepay the entire or part of the outstanding loan amount. Windfalls like bonus or maturity proceeds from insurance policies should be used to prepay a part of the home loan from time to time.

Image result for home loan

Next option is that you can opt for a balance transfer. Under this option, you can transfer the entire outstanding loan amount to another lender at a lower rate of interest and other better terms and conditions. Lastly, you also have the option to maximize the down payment. Making a higher down payment when obtaining a home loan can reduce the principal amount. A lower principal amount means lower interest and EMI payments. So, in case you are struggling with debt-burden, take into account the above-mentioned steps to reduce your home loan interest rate burden. Also, don’t miss your EMI payments as it can severely affect your credit score.

 

Top Up Loan vs. Personal Loan: Which is Better

An additional loan amount availed on your existing home loan is referred to as a top up. If you have recently availed a home loan and you require funds for renovation or extension of your house, then you have two options either you can avail top up on existing home loan or you can apply for a personal loan.

Image result for top up loan

Top up loan is a better option because its approval and disbursal process is quick as you are an existing customer of the bank. Top up loan is available for a longer tenure i.e. the remaining tenure of your home loan, whereas personal loan can be availed only for a period ranging up to 5 years. Interest rate on top-up loan is low in comparison to a personal loan. Amount of loan in top-up loan is decided based upon your existing home loan outstanding and in personal loan you can apply for loan amount as per your requirement. You should opt for a top-up loan if you require funds immediately also your fund requirement is not high. On the other hand if your fund requirement is high and you can bear the burden of extra resultant EMI, then you can apply for a personal loan.

RELATED: Top Up Loan vs. Personal Loan: Which Option Should You Back