Everyone dreams of buying a new house at some point in their lives. Owing to the easy home loans available, many choose this option. It is not too easy to buy a house with the current volatile market without availing home loan online or otherwise. If you are one of the people who seek to apply for a home loan online (or at a physical bank location), is aware of a few important points. Yes, there is plenty of advice available on the internet regarding quick home loans. Read this article to acquire useful information that will help you choose the best housing loan.
What is a Home Loan?
A financial instrument enables you to purchase or construct a house. Presently, many options with home loan India allowing you to refinance existing home loans.
Types of Home Loans
Multiple kinds of home loan exist, depending on your specific needs. The basic types are:
- Home Purchase Loan – These are the most popular kind of home loans. This is a loan for you to purchase a new apartment or property. Most banks and financing institutions offer this kind of loan. Different banks have different home loan interest rates.
- Land Purchase Loan – This sort of loan is in use to buy land where you will construct your house in the future. In this, banks provide about 90% of the total cost, while you put the rest forward. Compare the home loan interest rate to pick the best option.
- Home Construction Loan – This loan is for applicants seeking to construct a house on their existing land and involves a somewhat tricky process. Yet, most banks offer this loan.
- Home Improvement Loan – Often people want to renovate their existing homes but do not have the funds to do so. This is a good option for them. The maximum loan eligibility is in connection with the applicant’s financial position and debt to income ratio.
Moving on to things impacting an applicant’s home loan application:
- Current income bracket
- Type of property and its location
- Total market value of the property
Next, the different types of interest rates available to home loan applicants are:
- Fixed interest rate – Here, the interest rate remains the same for the entire span of the loan. Changes in the market will not affect it. These tend to be slightly expensive than the other option discussed below.
- Floating interest rate – The rate of interest here changes depending on the market and its performance. It is a little cheaper than the fixed rate and helps in saving some money on the interest paid.
Some important things to keep in mind while applying for a home loan are:
- Understand your specific borrowing capacity.
- Know your credit score and work towards keeping a healthy credit score.
- Choose a loan tenure that works best for your current situation and negotiate for better terms with the bank.
- Read the terms and conditions of the home loan properly as they are legally binding. Read all the clauses so you know what exactly you are getting into and before you put your signature on the documents.
With due diligence and studying all the requisite conditions, it is possible to avail a decent home loan in this market scenario. Research well and assess your financial status before making any permanent decisions related to availing a home loan as it is a long-term commitment.