Everyone dreams of owning a home one day. Such a type of stability is what we strive hard for our entire life. But it is essential to understand that buying a home is not equivalent to purchasing for groceries. Making such crucial financial decisions demand robust budget-planning and numerous formalities, and most of the time, people take financial aids like using home loan apps to fund their goals.
The concept of a home loan, although, is not challenging to understand, but it is not something you should take lightly as well. If you’re planning to take it, here are the ten most important things you must know before applying offline or through a home loan app:
- First Step: Selecting a Home or a Loan?
Usually, people tend to go on the search for finding their perfect home and then sit to understand their loan options. But in reality, you must first identify your financial state, look at how much loan can be approved to you, and then embark on a quest for finding a suitable home match.
Using easy loan appslike Bajaj Finserv, you can avail of pre-approved home loans to clarify your decisiveness and set a budget.
- Types of Home Loans
There are mainly three types of home loans available:
- Adjustable/Floating Rate Loans
The interest rates depend on the benchmark or reference rates of the lender and are subject to change as the latter fluctuates.
- Fixed-Rate Loan
The interest rates are decided at the time of taking the loan and is constant throughout the entire tenure.
- Combination Loan
One part of the loan is at adjustable interest rates whilst the other has a fixed rate of interest
- Credit Score
Your credit score plays a vital role in deciding whether you are reliable to borrow money from the lender or not. Whilst many easy loan applications do not demand a credit score; you must verify such details before-hand.
- Eligibility Criteria
The next step is checking your eligibility to see whether you will be able to apply for the loan or not. You can quickly get this information on loan apps.
Equated Monthly Instalments or EMIs refer to the repayment amount you will be making every month. The higher the interest rate on your loan, the more will be the EMIs.
Tenure refers to the time you will take to make all the repayments. Home loans usually have a maximum period of 30 years, depending upon the lenders or various loan apps. Remember, more extended the tenure period, lesser the amount of your monthly EMIs.
- Documentation Required
Knowing what all documents (identity proofs, income proof or bank statements, property documents) are necessary for your application and verification is also must. Please apply for a home loan on an instant loan app for minimum documentation and convenient procedures.
Covering your loan amount with an insurance plan is vital to avoid burdening your family members from settling your uncleared debts. In case something happens to you, the insurance company will make the necessary payments.
- Loan Amount and Processing Fees
Setting your budget according to your financial health, is imperative. The amount you borrow from the lender is known as the loan amount. Besides that, there’s a processing fee charged whilst applying through instant loan apps or other ways.
In case you miss repaying more than three iinstallments your lender has the legal right to take strict action against you (default) without the interference of courts.
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Besides these ten basic pointers, you must research well before applying for a home loan. Read all the terms and conditions of your lender and then make a deal. Understand different categories of home loans, their pros and cons, and which one suits you the best. Once you are thorough with the entire concept of home loans, only then make a decision.
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