Purchasing your own house is everyone’s dream. However, it requires a huge sum of money during its purchase, and sometimes it becomes difficult to bear the entire expense out of your own pocket.
Under such circumstances, borrowing home finance is ideal as it offers borrowers plentiful funding alongside a considerable interest rate. Above all these, another vital factor is the home loan tenor.
Factors to consider before selecting the right home finance tenor
Here are some important factors that borrowers should consider before choosing the right home loan tenor:
This is the primary factor while choosing a home loan tenor. While opting for this loan, remember that the EMI amount will depend on an individual’s monthly income. Also, individuals must be cautious about taking any burden upon themselves by going for a big loan amount far from their capability.
Further, the borrowers should not take an EMI amount that covers almost 30 to 40 % of their monthly salary as it may make them fall under a financial burden. This is why taking present earnings into account is essential while deciding on the home loan tenor.
Home finance amount
The loan amount is directly related to the amount of EMI alongside principal and accrued interest. This means with the increase of EMI, the principal and interest rate will also rise. Similarly, during a smaller tenor, the instalments will be lesser. It is recommended that the borrowers avoid defaulting while repaying their loan as far as possible.
Choosing the right property
Purchasing a new house is a dream of every individual. But sometimes, too much cost of the house can surpass a borrower’s affordability, causing a burden on their financial status.
Make sure to verify the current interest rates before choosing a property for collateral. Moreover, the borrower must select a property as per their affordability to avoid any unnecessary problems in future. It is suggested for them to choose such a property that can be beneficial. This is because it will enable monitoring the EMIs alongside keeping an eye on the interest rate.
Making down payment
A down payment is a lump-sum amount of money that a buyer pays during the early stages of purchasing an expensive product or service. The loan amount also lessens as a customer pays quite a large part of the product’s total price.
The home finance interest rate is calculated based on the principal amount borrowed by a customer. Thus, if the loan amount increases, more money must be paid as interest besides a higher home loan EMI amount. Therefore, it is always a practical choice to pay a certain sum as a down payment.
Verifying interest rate
Another vital factor a borrower must consider before choosing home finance tenor is the interest rate. While going for a longer repayment period the loanee might have to pay a large amount of total interest rate as interest is charged annually. But if the tenor is short, rate of interest will also get reduced. Potential pledgers can take the help of a home loan calculator to compute their EMI on loan repayment.
For instance, there are plenty of financial institutions that provide pre-approved offers through which the lending process is benefitted. They provide these offers on various financial products like home loans, loans against property etc. Applicants can check their pre-approved offers by inserting details like their names and contact numbers.
Home loan eligibility criteria
Here are the following eligibility criteria required before borrowing a home loan:
23 to 70 years
Minimum of 3 to 5 years
750 or above
How to apply for a home loan online?
Following are the steps to apply for a home loan online:
Step 1: Enter personal, financial and employment information in the application form
Step 2: Use the home loan eligibility calculator to determine the loan amount
Step 3: Complete documentation of property
Step 4: Upload necessary documents and click on ‘Submit.’
Step 5: Access and avail pre-approved loan facility
Reasons to refinance home loan
The top reasons to refinance your home loan are as follows:
- Reduced payout interests
- Top-up loan facility
- Poor customer service of the lender
- Change in the financial status of borrower
Purchasing your own house is everyone’s dream. Hence to avoid unnecessary money wastage from one’s own pocket, it is better to purchase a home finance. But a borrower needs to focus on every necessary condition of its policy before applying for it.