Planning a home loan, consider this first
Investing in a dream home is one of the most important decisions for an individual. The entire process of buying a home requires a fair amount of self-evaluation, research and smart decision-making. Opting for the right home loan is an essential part of this decision making.
To enable you to choose wisely and have smooth loan tenure, we have listed some points, which will give you a clear picture of the entire process.
Plan well
You need to figure out how much expenditure you can afford to buy your dream home. Since this expenditure will impact your personal finance for a long tenure, it may be wise to take liability that you can afford. You may approach a bank and get your home loan sanction done for you to know how much you are eligible for.
Look for the right scheme
Study all the details of the schemes offered and see which one suits you the best. Many loan-seekers settle for fixed rate loans to avoid risk, whereas some feel more comfortable with floating-rate loans. While a fixed rate loan keeps you away from tracking changes in interest rates, a floating rate option might benefit you in times of low interest rates.
Choose the right loan tenure
The tenure you choose determines your total pay-off. In a longer tenure, you pay lesser monthly installments but you end up paying much more. On the other hand, a shorter duration offers bigger monthly liability but lesser total payment.
Be comfortable with your EMI
Evaluate the terms and conditions of your bank on both quantitative and qualitative aspects. Make sure you choose an EMI scheme that fits your pocket. The decision of incurring this expense will ultimately lead to a safe and secure future for your family and you should support this with a wise financial decision.
Additionally, you can also follow the fundamental rule of your EMI not exceeding 45% of your total income, including all other EMIs, if any.
Look out for attractive offers on home loans
It always feels good when you get something extra. See if your bank offers you a scheme that will ease your repayment process.
As an example: ICICI Bank has recently launched a 1% cash back offer on home loans. Under this cash back offer, 1% of every EMI will be returned to the customer. With this scheme, the customer can save over Rs.3.50 lac on a home loan of Rs.50 lac with tenure of 20 years. This will be beneficial for borrowers as they will save a huge amount at the end of the loan tenure.
Stay connected with your lender
Any lender will approve your loan on the basis of your current financial situation. Hence, if there are any changes in circumstances, such as employment status, it is advisable to communicate it to your bank. Keeping the bank informed will help it to rework your repayment schedule.
Taking a home loan brings you in a long term relationship with your lender. Hence, a smart decision of choosing one will ensure a better financial relationship in the long run.