With the RBI announcing a cut in the repo rate in 2019, the lending rates have also gone down. Now is a good time to avail a housing loan in India.
However, since the loan amount is huge and the repayment tenor is quite long, it is crucial to know every detail about the loan before applying for it. For instance, having information about your monthly payments, various home loan offers, types of loans you can avail, etc. make the process of availing the funds easier.
Below is a checklist of things you should know before applying for a home loan.
Check your loan eligibility
There are several factors that can affect your home loan eligibility. Most financial institutions check parameters like your age, your employment status, CIBIL score, etc. to determine your eligibility.
To check whether you are eligible to avail a loan, you can use an online housing loan eligibility calculator from financial institutions.
Learn about the types of interest you can opt for
There are primarily two types of home loans based on the nature of their interest rates. They are:
- Fixed interest rates
In this type of loan, the home loan rates of interest are fixed and remain the same throughout the tenor.
- Floating interest rates
Floating interest or adjustable interest rate fluctuates throughout the tenor. This type of interest rate gets influenced by factors like changes in India’s economic policies.
You need to know about the type of interest rate getting levied on your home loan and assess the EMI amount beforehand.
Know about home loan offers
Some financial institutions bring attractive home loan offers that make availing loans easier. Opt for lenders offering additional benefits to crack a better deal while applying for a home loan.
Know about the payments
The most important part of availing a home loan, perhaps, is assessing your monthly payments and tenor.
EMI or Equated Monthly Instalment is the amount that you need to pay each month throughout the repayment tenor. EMI includes repayment of the principal amount along with interest levied by the lender. A longer tenor will ensure lower EMIs but will increase the total payable interest.
You can calculate the amount of EMI you have to pay by using a home loan EMI calculator online. The calculator requires your loan amount, tenor and rate of interest to compute the amount you need to pay each month. To make sure that you can pay the EMIs against the amount you take as a loan, it is best to calculate your EMI before you avail a home loan.
Know the documents you have to submit
Sometimes the process of availing home loan can go wrong at the stage of documentation. Ensure that you have all the documents required to apply for the home loan ready while applying.
The documents required include:
- KYC documents including identity proof and address proof.
- Income documents for salaried individuals and self-employed individuals.
- Property documents that include the title deed, sale agreement, etc.
- Other documents as required by your lender.
Having these documents ready can fasten the process of applying for the loan.
Thus, with this information in hand, the process of home loan online application can be completed without any glitch. Since availing such a long-term loan is quite a big step, it is crucial to understand each aspect carefully before applying.