Owning a home is one of the most important milestones to achieve for young professionals today. There is no need to worry even if you cannot afford your dream home right away. Home loans offer a great solution. You don’t need to wait until you have saved all the funds required to buy your own house.
Are you wondering how to choose the right home loan? The decision entails selecting the right bank. So, here are five tips to help you make the best decision.
The Rate of Interest and Loan Amount
The interest rate is the most crucial factor to consider while looking for any loan. This represents the cost of borrowing money. Before you begin the home loan process, compare the interest rates mentioned by different banks. Remember that the interest rate will differ depending on the tenure (period for which the loan is taken) and the amount you wish to borrow.
Some banks have a loan tenure of up to 30 years, giving you ample time to repay. The loan amount will be determined by the cost of the property you intend to buy and the number of funds that you can pay towards this. A higher down payment made by you brings down the total interest. However, if you do not have enough funds, choose a bank that offers up to 90% financing.
Eligibility Criteria and Loan Amount
The next step is to check different banks’ home loan eligibility criteria. Such criteria may include your age, monthly income, financial status, credit history, credit score, and whether you have other financial obligations.
Documentation Process
Some banks have a complex documentation process. Choosing a bank that offers a wholly digitized home loan process is a good idea. Check the list of home loan documents needed, which may include:
- PAN card or form 60
- A photo identity proof (like a valid passport, voter’s ID card, driver’s license, Aadhar card, etc.)
- An explanation of address (any of the above can also serve for this purpose)
- Income proof (like salary slips and ITR for salaried individuals)
- Property proof (like a photocopy of draft sale deed and chain title documents, etc.)
Keep the home loan documents handy before making an online application.
Prepayment Facility
Check whether the bank allows prepayment. This is important because you may have funds in the future, and a prepayment can help you reduce your interest burden. Choose a bank that offers as much as 40% prepayment. You can also use an online part-payment calculator to know how much interest can be reduced with this option.
Loan Processing Time
Finally, enquire about the home loan processing time. Choose a bank with a shorter disbursal period, superior customer service, and a good reputation.
Remember to learn about all the charges apart from these five critical points. Choosing a bank that maintains complete transparency and offers a digitized experience for your utmost convenience is best. With these facilities, buying your dream house can be a pleasant experience.
