The idea of buying your own home is perhaps the most important decision in life for most of us. This is especially true for the majority class of India, the mid-income households that is the largest population of new home buyers in India.
When purchasing home it is very important to keep in mind the crucial tips to ensure that the process is not burdensome. Most of you will rely on a home loan to make this purchase possible and must keep in mind
Some Important Home Loan tips To Make The Whole Process a Comfortable Experience.
Type of Home Loan
Whether to go for ‘Fixed-rate home loan’ or the ‘Floating home loan’ is always the bone of contention. No one seems to know which is more appropriate. In a fixed rate home loan you are able to make calculations of how much will you have to pay in the end. But to evaluate the same for a floating home loan is mighty difficult. It is best to speak to an experienced real estate advisor who can differentiate that for you in numbers.
The Interest Rate
Banks offer different home loan rates based on the market condition. As a home buyer, it is your personal responsibility to inquire and compare the home loan rates and figure which one suits best for your financial condition.
Evaluating the best tenure to repay your home loan is not easy. For some people, the 10-year repayment tenure sounds convenient while others will have to work hard for even a 20-year repayment plan. Now, what loan duration works best according to your financial status totally depends on your domestic management.
To procure your home loan there are a number of add-on charges and fee just to initiate the process – like application processing. Often, this can be burdensome and you have to discuss the same with your home loan advisor.
Down Payment v/s EMI
Your initial down payment amount decides what will be your Earnest Monthly Instalment (EMI) figure. Make sure to make the maximum down payment at the beginning to reduce the stress of EMI in the coming years. Also, make sure that your EMI amount is not more than 35-40% of your total income. This is an important step to ensure that you do not miss paying EMI due to domestic financial commitments.
The recent directives by the government of India ensure that no penalty is charged when making pre-payments against your home loan. So whenever there is excess in your pockets, especially during bonuses, make it a point to make early payment and reduce future stress of EMI.