Tips to get a good home loan
Posted on: 11/Jul/2015 10:20:26 AM - No. of views : (1438)
Here are a few things that may help you get a better home loan.
1. Interest
There are two types of interest that you have to pay with your loan. FIXED interest rate is one that will be the same for the entire duration of your loan. These will not change with the market rates. FLEXIBLE interest rates change with the market rates during the time of your loan repayment. This is be between 1 and 2.5 % higher than the fixed rate. Rates will increase and decrease according to market fluctuations.
2. Eligibility
How eligible are you to procure a home loan? First, look at your SALARY. Normally, the instalment amount will be around 50 to 80 % of your salary. Your eligibility will come down if you have other loans. The number of DEPENDENTS that you have is another criteria. The more dependents, the lower your eligibility. Are you salaried or self employed? The TYPE OF EMPLOYMENT determines your eligibility. The total amount of the loan will be around 80 % of the total VALUE of the property.
3. Age
Normally, a home loan will not spill into retirement age. So, the younger you are, the better your loan will be. However, if you have a younger co-applicant, or your co-applicant�s salary or income is also considered, you will get a better deal.
4. Agreement
A loan agreement has too much legal jargon. Read it carefully and understand the fine print. For example, the word default may not mean just failure to pay. Default, in many cases, also refers to the death of the applicant or problems between co-applicants. Get professional help to read the document, if necessary.
5. Balance transfer
Most loans have the option to shift your remaining amount to another lender. If you wish to do that, make sure you know the foreclosure details - another reason why you need to read the fine print.
Here is a checklist of things to look into while getting a home loan:
- Interest rates
- Flexible repayment options
- Loans which offer separate amounts exclusively for home improvement
- A refinancing option wherein you can avail a loan up to the registered value of your property
- Part-prepayment facility which allows you to prepay at no extra charge
- An option to foreclose the loan anytime during your loan tenor at no extra charge
