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Home Loan

Buying a house is a dream for everyone. A home loan lets you realize this dream by raising funds for buying a house.

With home prices rising exponentially, it has become difficult for buyers to afford a house on their own. A home loan becomes a big facilitator in such a situation. A home loan enables you to afford a house, which otherwise you would tend to miss due to high costs.

A home loan is a loan taken to acquire a property or to construct a house. Apart from purchasing a house, home loans are also available for home repairs, home improvements, and renovations along with addition of a new built-up section to an existing house. Usually, lending institutions offer 75% to 85% of cost of acquisition/ construction of property as a loan.

 

Various factors like income of the borrower, liabilities, financial track record, employment status etc. determine eligibility of a borrower for a home loan. One must avail the loan based on repaying capacity. Under home loan, ownership related documents of the property are kept with the lender until the borrower repays the entire loan.

 

Home Loan can be availed for following purposes-

 

>Purchase of a house/ flat/ apartment/ villa

 

>Purchase of piece of land

 

>Home repairs

 

>Home renovation cum improvement

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Factors for getting a Home Loan

All banks and financial institutions give home loans. You should consider certain factors before zeroing in on a home loan. We have discussed some of these factors here for your easy reference

Rate of Interest

It is the most crucial factor to consider while taking a home loan. The lower the interest rate, better it is. Lower interest rate reduces your monthly EMI payment, which in turn is pocket friendly for you. Also, a lower interest rate ensures that your payment towards interest is reduced and payment towards principal repayment is increased.

Fixed or floating rate of interest

Banks charge certain amount as processing charges to process your home loan. Further, there are charges towards getting the due-diligence of property and legal fees. Some bank also charge administrative charges while disbursing home loan. Inquire from the bank regarding all these charges before proceeding further.

Loan term

Guarantor is a person who undertakes to pay back your loan in case you default in payment. Many banks insist for a guarantor before disbursing home loan. Make sure that you have someone who is willing to become guarantor to your loan.

EMI

There may be times when you have surplus funds in your hands and you want to utilize those funds by depositing them in your loan account over and above your scheduled EMIs. Please check that there is no prepayment charges when going in for a home loan. Many nationalized banks do not charge pre-payment charges these days.

Margin money

Banks often finance app. 80%-85% of the cost of acquisition of property. The purchaser is required to arrange the balance amount on its own. This amount is known as margin money. You should have margin money available once you decide to take a home loan.

Prepayment penalty

Your EMI will depend upon the tenure of your loan. Higher the tenure, lower the EMI and vice-versa. Choose an EMI that best suits your pocket.

Guarantor

You need to decide the time horizon within which you can repay the loan. A loan with a longer tenure will involve higher interest payout. Choose your tenure smartly so that your interest payout is reasonable. Generally, home loans are availed for a tenure up to 20 years depending upon the repayment capacity.

Processing charges

Fixed interest rate is constant whereas floating rate keeps on changing. Fixed interest rate is normally higher than floating rate. Normally, banks offer loan at floating rate of interest. It is recommended that you go for a floating rate, as it is less than fixed rate and with economic boom, interest rates are expected to come down further in future.

Note :-

A home loan is a great way to raise money for buying your house. This is more viable option than personal loan, which carries a very high rate of interest. Now days, home loans are available at very competitive rate of interest. Take a decision carefully after evaluating your repaying capacity.

Legal Dost is your dost in arranging a home loan with best terms for you for buying your dream home. We have tie-ups with all leading banks and financial institutions and will suggest you best options based on your requirements and objectives. We will take care of the entire paper work and let you sit and relax. Visit Legal Dost for availing a home loan and experience our best services.