Top 4 Tips to Consider before Availing a Home Loan Offer in India

In India, people don’t buy a home; they invest in a dream. When it comes to buying a home in India, it has to be one of the biggest financial decisions of one’s life. People who are looking to move into a readymade home opt for a home loan. But, availing the best home loan offer is easier said than done.

Many borrowers are unaware of some aspects that they need to consider such as housing loan interest rate, Credit Score, documentation and more in India.

They are also unaware of the home loan interest tax benefits that they can enjoy on principal and interest components.

Buying a home is a once in a lifetime decision; hence, you need to consider some factors to help you opt for the best home loan scheme in the market. Here are some common yet significant things that you should consider before availing a housing loan.

  • Your CIBIL Score

The CIBIL Score is the mirror of your creditworthiness. It tells the lender how well or poor you have managed earlier or current debts including credit card balances. Based on your repayment history, you are assigned a Credit Score ranging between 300 and 900. Anyone with a CIBIL Score of 700-750+ can avail of the best offers. What’s more, you can also enjoy lower home loan interest rates in India. It can help you repay the loan in small installments. Hence, you should ensure to have a robust CIBIL Score by paying off your existing loan EMIs and credit card outstanding on time.

  • Home Loan Interest Rates in India

There are two types of home loan interest rates that a lender can offer you – fixed and floating. Under the fixed one, the home loan EMIs doesn’t differ much over the tenure. Under the floating one, the home loan interest rates in India gets computed on the MCLR and will change over time. You should opt for a floating one as the fixed one comes with a fixed liability and also has a penalty for foreclosure. The floating home loan interest rates in India will keep varying from time to time and let you save on interest, monthly EMIs,  and other related costs.

 

  • Home Loan Tenure

A home loan generally comes with a tenure of up to 20 years and directly affects your EMIs. Banks prefer applicants with a shorter repayment period as it cuts their default risk. It is suitable for the borrower as well because you can repay the loan in a short time and lessen the interest burden on the EMIs. You may have to pay a higher amount as the home loan EMI, but it will surely help you in reducing the overall cost of the housing loan.

  • Down Payment

No lender is going to sanction the entire value of the home that you wish to buy as the housing loan amount. The maximum value that you can get is 85-90%. You will need to arrange the remaining 10-15% as the down payment. The remaining amount will then be converted into the loan EMI, which you will be paying per month. If you have some surplus cash, you can put down an increased down payment. It will help you save on the home loan interest rates in India that you need to pay in the future.

Keeping the points mentioned above in mind before you avail a housing loan scheme is vital to help you grab the right home funding alternatives.

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