Considering India’s present economic situation, the Reserve Bank of India decided to bring down the repo rate to 4%, which earlier stood at 5.15%. It also brought a drastic change in the home loan sector and the reduced interest rates and feasible EMIs.
The boost in demand in the housing loan segment has played a vital role in improving the overall market condition. In order to utilise the situation, more people are opting for these loans, coming with flexible repayment facilities. Also, with several schemes like Pradhan Mantri Awas Yojana (PMAY) under the ‘Housing for All mission’ by the Central Government, individuals are able to afford their dream house easily.
The abundance of facilities might get overwhelming for citizens in the beginning, especially while looking for a suitable home loan. Following are a few necessary factors to keep in mind before applying for a loan.
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Calculate EMIs against the loan
HFCs decide the interest rates, loan value and EMIs mainly on the basis of one’s income range. Therefore, having a decent annual income is required to find a convenient repayment scheme. It is always advisable to calculate your EMIs before taking the big leap and investing a huge chunk of money on your house’s construction.
However, with flexible home loan EMI tenure offered by housing finance companies, you have more loan repayment options to choose from.
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Pay a substantial amount as down payment
After analysing monthly instalments, you should check how much you can provide from your savings as a down payment. It plays a crucial role in reducing the overall principal and, by extension, EMI since you are funding a substantial portion from your own pocket. This, in turn, reduces home loan interest rate.
Therefore, focus on saving up money before deciding to apply for a home loan to have adequate funds to back yourself up later.
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Meet eligibility criteria and choose loan amount carefully
Another important part of a home loan is deciding the principal amount. While you may be eligible for a significant home loan sum, borrowing without a second thought can increase your EMI burden.
Also, assess the eligibility criteria for a specific financial institution. Different housing finance companies come with a different set of eligibility parameters. Even though some of them have lenient home loan eligibility criteria, factors like CIBIL score, good repayment track record still play vital roles. Make sure to maintain these from the very beginning in order to obtain favourable interest rates from HFCs.
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Look for offers
Even though there are plenty of financial institutions available, it is wise to compare the interest rates and check offers before settling for one.
Popular HFCs extend pre-approved offers these days to make financing less time-consuming and simple. These offers are available on several financial products like loan against property, home loans, etc. You can easily check your pre-approved offer by submitting necessary information like your name and contact number and find yourself a good deal as well.
Decoding the home loan process in India can be challenging if one is unaware of document requirements and stringent eligibility criteria. However, due to its secured nature, the interest rates remain reasonable. Keeping the aforementioned aspects in mind should aid you to acquire the most profitable form of credit.
