With home prices touching new heights, homebuyers have to take loans in order to realize their aspirations of owning a house. The application procedure for home loans has become easier and most financial institutions offer swifter disbursals nowadays. Lower interest rates and RERA have contributed towards enhancing consumer sentiments in the market in recent times.
Here are the key things to keep in mind before taking a home loan:
- Credit History- The interest that you pay on your home loan is being tied to the CIBIL score by lenders. Most financial institutions usually keep their best possible interest rates for customers who have CIBIL scores of 750 or above. People with lower CIBIL scores usually have to pay higher interest rates. A cheaper home loan enables you to apply for home loan amounts that are higher, making it possible to purchase costlier homes. You should find out your credit score before applying for a home loan.
- Interest Rate Types- Home loans usually come with floating or fixed rates of interest. Sometimes it is a combination of both these types for a limited tenor at the beginning of the home loan. Floating interest home loans are linked to the MCLR with the interest being reset at specific intervals. This is hugely productive for customers since the rates of interest have been going down over the last three years.
- Negotiation of the interest rate- The actual interest rate that is charged is dependent on the eligibility criteria. You should try and negotiate an interest rate, which is way better. You can compare loan options for choosing the best interest rates and also through enhancing your loan eligibility with the addition of a co-borrower and also adding his/her income to your own.
- Your borrowing ability- People often decide to shell out higher EMIs, perceiving that the loan burden would go down with time on account of income increases. However, the income may not increase with the passage of time. As a result, people have to borrow till the limit where repayment of the EMIs will not be a burden on their finances.
- Comparison of home loans- Several lenders offer home loans in India but you should thoroughly compare interest rates before applying. Check the interest rates, EMIs, processing fees and other charges tied to loans. With home loans being available online in recent times, you can definitely explore and do your homework before applying.