Making an investment for a house of your own is a great decision, and with the increasing property values, this decision might actually be a ‘once in a lifetime’ opportunity for many. Therefore, getting a home loan becomes obligatory to make the most of your selection.
However, the task of applying for a Home Loan depends on getting the right home loan based on your requirements. To simplify the process, we bring to you some critical factors that you must know while applying for a Home Loan:
1) Do Your Thorough Research: Firstly, you should do the proper market research on your own. Read reviews and testimonials of the best Home Loan providers in India. Check out the best available products in the markets based on their terms and conditions, services, interest rates, and other charges.
2) Check Interest Rates of Top Lenders: When it comes to finding the best Home Loan, look out for the least interest rate available in the market. Getting a Home Loan is a long-term commitment, hence, even a change of 0.5% in interest rate can make a huge difference. One of the best Home Loan options at present is Aditya Birla Home Loan. It offers Housing Loans at interest rates starting from 9% p.a.
3) Know Your Home Loan Eligibility: Your overall eligibility mostly depends on your loan repayment capacity. Hence, it is important to understand how much EMI you can comfortably pay for your Home Loan each month. You can use EMI Calculators available online to know your eligibility.
4) Documents Required for a Home Loan: Generally, each lender has its own list of documents that they require for application and approval process. These documents include an identity proof, address proof, age proof, income documents, property documents, and so on. Before applying for any loan, it is advisable to have all the required documents ready in order.
5) Tax Benefits on a Home Loan: Most of the people accomplish their dream of owning a house with Home Loan, but many borrowers are unaware of the fact that they can claim tax benefits on their Home Loan repayment. As per Section 80C and 24B of the Income Tax Act, you can avail a tax rebate of up to Rs. 1.5 Lakhs on principal amount and up to Rs. 2 Lakhs on interest repayment simultaneously.
6) Pradhan Mantri Awas Yojana: This amazing scheme launched by our honorable Prime Minister, Mr. Narendra Modi, is beneficial to every first time Home Loan borrower. You can get a subsidy of up to Rs. 2.67 Lakhs on your Home Loan repayment under this scheme.
7) Charges and Penalties: As such Home Loans come with interest rate, processing fee, legal verification fee, stamp duty, and payment swapping fee as charges. However, some lenders may implement some additional charges or penalty on Home Loan, for example, late payment fee, Home Loan Balance Transfer fee, and so on. Make sure you are aware of all the charges associated with the loan you are opting for. Ask the bank for the list of charges you will need to pay.
8) Home Loan Insurance: Home Loan insurance helps your dependants to repay the outstanding loan amount in case of your demise. There are some insurance policies that cover your loan repayment in the event of loss of job, ill health, accident, some critical ailment, and so on. Make sure you analyse the cost of your Home Loan before opting for this feature as you will need to pay a higher EMI (including the insurance premium cost) each month.
9) Tenure of the Loan: Tenure is the duration under which you need to repay your Home Loan amount with interest. Before Availing a Home Loan, you must understand the pros and cons of long as well as short tenure. While a long tenure helps you reduce the EMI amount, the shorter tenure would help you save a significant amount of money on interest cost. If you can afford to pay higher EMIs, it’s always advisable to opt for short tenure, to reduce your overall Home Loan cost and to finish off your loan at the earliest. If you are looking for low EMIs, longer tenure will be more suitable to you.
We hope that these factors will be helpful for you if you are planning to apply for a Home Loan.