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Everything You Need To Know About Home Loans

Buying a home is a dream for everyone. With home prices rising exponentially, it has become difficult for buyers to afford a house on their own. A home loan becomes a big facilitator in such a situation. A home loan enables you to afford a house, which otherwise you would tend to miss. 

A Home Loan is a loan taken to acquire a property or to construct a house. Home loans are also available for home repairs, home improvements, and renovations along with addition of a new built-up section to an existing home.

Banks and financial institutions give home loans. You should consider certain factors before zeroing in on a home loan. 

Some of the these factors are discussed here for your reference-
  • Rate of Interest- It is the most crucial factor to consider while taking a home loan. The lower the interest rate, better it is. Lower interest rate reduces your monthly EMI payment, which in turn is pocket friendly for you. A lower interest rate ensures that your payment towards interest is reduced and payment towards principal repayment is increased.
  • Fixed or floating rate of interest- Fixed interest rate is constant whereas floating rate keeps on changing. Fixed interest rate is normally higher than floating rate. Normally, banks offer loan at floating rate of interest.
  • Loan term- You need to decide the time horizon within which you can repay the loan. A loan with a longer tenure will involve higher interest payout. Choose your tenure smartly so that your interest payout is reasonable. Generally, home loans are availed for a tenure up to 20 years depending upon the repayment capacity. 
  • EMI- Your EMI will depend upon the tenure of your loan. Higher the tenure, lower the EMI and vice-versa. Choose an EMI that best suits your pocket.
  • Margin money- Banks often finance app. 80%-85% of the cost of acquisition of property. The purchaser is required to arrange the balance amount on its own. This amount is known as margin money. You should have margin money available once you decide to take a home loan. 
  • Prepayment penalty- There may be times when you have surplus funds in your hands and you want to utilize those funds by depositing them in your loan account over and above your scheduled EMIs. Please check that there is no prepayment charges when going in for a home loan. Many nationalized banks do not charge pre-payment charges these days.
  • Guarantor- Guarantor is a person who undertakes to pay back your loan in case you default in payment. Many banks insist for a guarantor before disbursing home loan. Make sure that you have someone who is willing to become guarantor to your loan.
  • Processing charges- Banks charge certain amount as processing charges to process your home loan. Further, there are charges towards getting the due-diligence of property and legal fees. Some bank also charge administrative charges while disbursing home loan. Inquire from the bank regarding all these charges before proceeding further.          
At legal Dost, we will understand your requirement and then suggest you home loan options best suitable to your objectives. We make the tiresome process of getting a home loan simple for you. We let you concentrate on your dream home, while we do all the paperwork for you.  So be smart and embrace the change the loan industry is witnessing, with Legal dost. Visit today for a quote!
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