Despite the availability of innumerable lenders and financial institutes, taking a Home Loan seems an arduous task. Moreover, while getting a loan sanctioned, it is extremely important to know some of the aspects related to it beforehand so that you won’t have to face hassles later on. Thus, here are five factors to consider while taking a loan.
With an increase in the prices of real estate, purchasing a house has become a tedious task. For a particular class of people, it is quite impossible to invest in a home without taking a Loan. Although availing a loan to buy a house has become easier than before, thanks to the quick procedure of lending institutes, it is still crucial to be attentive in this regard.
Therefore, if you are considering to get a loan, here are five things that you cannot afford to overlook in any situation:
- Effect on Eligibility:
Various factors can affect your ability to take a home loan. Usually, lenders set the maximum instalments at 40-50% of the salary and that too, after deducting extra allowances. Also, if you have any other existing loan, it can further reduce the chances. Another factor that lenders usually look at is the number of dependents that you have. The higher number of dependents usually means lower loan eligibility.
- Type of Loan:
There are two types of loans that you can avail of – one is with a floating interest rate, implying the changes in the interest rate with the fluctuations in the market. The second one is with a fixed interest rate, meaning that you would have to pay a fixed amount as the interest till the end. The clause varies from institute to institute. Hence, before selecting any loan, you must figure out the factors that can impact your repayment capacity.
- Documents:
Since the documents of a Home Loan are legal; thus, it might seem a difficult task to comprehend it. However, these are the documents where the devil hides. There are various such clauses present in the document, which you might not know of and hence it is highly recommended to cross-verify the entire document accurately. Any term that you aren’t able to understand should be clarified on time.
- Rate Negotiating:
Yes, you read it right. Irrespective of the loan type you are selecting, you have all the rights to negotiate the interest rate. If you have a clean history and have been paying all the debts on time, you can surely have an upper hand in this situation. Having a good credit score may turn things towards your side.
- Tenure:
Even after paying extra attention to every aspect, tenure is one such factor that usually goes out of sight. By taking up a longer tenure, you may get a chance to reduce the EMI. However, the fact that you must realise is that you will end up paying a higher interest rate. Therefore, while selecting the tenure, be a bit more cautious. Also, find out if you would have to pay extra charges if you plan on closing the loan earlier.
These are some of the beneficial and crucial factors that you must keep in mind while taking a loan. In the end, don’t forget to shop around as it can help you gain the best possible price at the affordable interest rate and an accurate tenure.
