One of the biggest investments in a
borrower’s life is purchasing a house. It is easy to dream and easier to say,
but toughest when it comes to making it true. If you have noticed the
television commercials on home loans, you may have noticed that the models get
extremely emotional while offering the loans. It is indeed a matter of emotions
when you purchase your dream home.
However, a home loan is not something you
can deal with emotionally. Emotions take over practicality that people forget
about crucial aspects before and after getting the loan. Let us learn about
them in detail –
Eligibility:
It is not a natural aspect to assess. Home loan eligibility includes facets
like present liabilities, income, assets, etc. In case the loan requirement is
higher than your eligible loan amount, some changes in the way you present
yourself to the lender could work. The basic conditions lenders look out for
are –
The age should be 21 to 65 years
Annual income differs depending on the type
of employment
Could be a salaried or self-employed
individual
Must be a permanent resident or
non-resident Indian (NRI)
The credit ratings should be between
700-900
The property type can be anything ranging
from completed project, under-construction project, land or plot, own land, buy
land, and build home
Interest rate types: The next crucial step before applying for a housing loan is
checking the interest rates. Of course, everyone wants lower interest rates,
but those who are considering a credit for the first time can get confused
between fixed and floating rates. In fixed rates, the prices remain the same
throughout the tenure. On contrary, floating rates keep fluctuating according
to the RBI rules and conditions. Though you have the liberty to switch from fixed
to floating rates, lenders, however, have a switching charge in place.
Affordable EMIs: Before taking out the credit, you must check the EMI portion. You
do want your dream home but not at the cost of your basic needs. Hence, monitor
the EMI amount you are going to pay every month. Rationally, the EMI should not
exceed 40 per cent of your monthly income. In case you have other loans
alongside, the portion should be 35 per cent. Housing finance or any additional
credit do not come free. They involve other penalties and charges as well. If
you invest a large chunk of your salary into EMIs, you will have nothing for
the future.
Tax benefits: One of the many reasons why house loans are in demand is owing to
its tax benefits. Typically, you get complete exemption on interest paid on
credit. However, if you plan to sell the house within five years of purchase, the
exempted tax gets deducted from the sale amount.
Insurance: Do
you know there is a home loan insurance as well? Yes. Have you thought who will
pay the outstanding dues in the event of your death? Your family might be
clueless about the repayment process. In such scenarios, insurance comes to the
rescue. Many lenders nowadays provide insurance along with the loan. It is
nowhere mandatory.
