Securing the best deal on a home
loan can be as difficult as selecting the home itself. With so many lenders proposing
many different types of loan products, selection can be difficult for
homebuyers. This blog lists critical factors you must consider for choosing the
best deal.
Just like the real estate alternatives,
there are numerous alternatives available for home loans. With every lender
trying to attract borrowers through beneficial deals and offers, the selection
can be difficult for homebuyers, particularly for first-time buyers. However,
there are a few crucial factors that can make it simpler for borrowers to
select a housing loan.
Rate of interest
While the rate of interest is vital
for every type of loan, its significance is amplified when it comes to
something as big as home finance. With the amount of money involved, even the
smallest of variations in the interest rate could mean a difference of lakhs of
rupees. So, start by comparing the home loan interest
rate. Select a few loans that are available at the cheapest interest rate before
proceeding with the application for the loan.
LTV Ratio
LTV or Loan To Value ratio is
the maximum home loan amount availed against the value of the property. The
remaining amount is to be paid by the borrower in the form of down payment. The
LTV ratio differs from lender to lender. As per the guidelines of Reserve Bank
of India, lenders can lend up to 90 per cent of the cost of the property for
loans of up to INR 30 lakhs. In case of properties above this limit, lenders
can lend up to 75-80 per cent of the property value. Depending on the price of
the property and the down payment you can manage, you will be a step closer to
selecting a lender.
Eligibility conditions
A lender would only grant
loans to borrowers who are consistent in repayment. For this, they have a set
of eligibility conditions involving income, age, credit record and other
factors. Loans are given only to borrowers who meet these conditions. Many reputed
banks now have home loan eligibility calculator on their official website to assist
borrowers in checking if they meet the conditions. Use such online calculators
to select lenders whose criteria can be met easily.
Loan EMI
The next important factor is
the loan Equated Monthly Installment (EMI). Factors like the amount of loan,
loan duration and interest rate are used for assessing your monthly installment.
Ensure that the EMI is something you can manage to pay for paying comfortably
every month. Many banks now offer online home loan
EMI calculator. You can simply calculate the EMI of your loan by
entering the amount, along with interest rate and loan tenure.
Processing fees
The lenders also levy a
processing fee to process your housing finance application. This fee differs
from lender to lender. In most cases, the banks charge 1 per cent to 2 per cent
of the applied loan amount. If you are looking for the best home loan, make
sure that you do verify the processing fee of the lender before applying as you
are expected to pay this from your own pocket.
