10 Things To Know Before Availing Home Loans
Introduction
Entering the premises of our own house is a feeling like no other. It is hard to put into words. Home loans provide you with a perfect gateway to fund your housing aspirations. They are secured loans where the property that is going to be purchased will serve as the collateral. Here, the lender will offer you a big percentage of the purchase cost of the property. Home loans are long-term commitment where you need to plan ahead.
In this article, let us discuss 10 questions that you should ask yourself before stepping into the world of home loans.
Am I eligible for availing a home loan?
The first thing that you need to check is your loan eligibility. Have a detailed conversation with your lender to know what criteria they have in place. Lenders will assess your income, repayment capacity, credit score, etc. to determine your eligibility. Other factors including age, financial position, and number of dependents will also be taken into consideration.
What are the types of home loans?
There are different types of home loans catering to different types of aspirations. Some people like high-rise apartments, some like an independent house, and some want a combo of a home that can also be used for commercial purposes. Home loans cater to a wide variety of customers with a myriad of varied requirements. Following are the different types of home loans that you will come across while looking for the right financial partner.
- Self-Construction Loans
- Loans for Purchase of Resale Flat/Independent Houses
- Loans for Purchase of New Flat/Independent House
- Loans for Mixed-Use (Residential with Small Commercial Unit)
- Home-Extension Loans
- Home Improvement Loan
- Purchase of Plot + Construction
- Shop Loan
Some lenders also offer balance transfer of existing loans from other financiers with top-up loan options. Balance transfer is usually done by people who want a better interest rate than their existing lender.
What are pre-approved home loans?
As the name implies, pre-approved home loans are loans that are sanctioned before finalizing the property deal. Here, you are not required to submit your documents related to the property. However, pre-approval doesn’t mean that your loan application will be approved but it is the closest you can get without applying for one. It is just that the process becomes much easier.
How much loan should I take?
After choosing the loan type, determine the amount you require to purchase the property. In addition to the property cost, also take into account the registration cost and other miscellaneous costs. Most lenders will offer 75% to 90% of the property value. This largely depends on your repayment capacity and credit history. If you can add a co-applicant, their income will also be taken into account thereby increasing your loan amount.
Is it okay to switch from floating to fixed rate of interest?
Yes, it is absolutely fine to switch. However, you might be asked to pay a small conversion fee to do so.
What are the documents required for a home loan?
The documents required in the case of home loans are minimal. Typically, the lender will request property documents, address, and identity proof. Business owners will be required to produce proof of business establishment. For salaried customers, recent payslips and Form 16 are required.
Is it necessary to take insurance with a home loan?
Purchasing an insurance cover is a perfect way to safeguard the borrower’s family. The main benefit is that if something unfortunate happens to the borrower, the insurance company will cover the outstanding loan amount. This way, the borrower’s family will be relieved from any potential financial strain. These days, lenders will actually insist people on taking insurance coverage into consideration with the financial safety it provides to both parties.
How important are EMIs?
In order to secure your financial future, you have to respect your financial present, that is, you have to pay your EMIs on time. By doing so, you will have an excellent credit score and lenders will be more than willing to help you out in times of crisis.
Can I preclose my loan amount before my tenure?
Yes, you can and it is a good thing to do so. Lenders offer a prepayment facility while offering home loans. For this, you might be asked to pay a small prepayment fee. This way, you can take the financial burden off you and concentrate on other things. Some lenders also offer a part payment facility where you can pay a bulk percentage of your outstanding loan.
The Verdict
After knowing all the above factors, the next and final step is to zero in on your lender. Even though this might be a little overwhelming, you can do it effortlessly when you have your requirements and the end goal in clear sight. If you’re looking for a reliable lender to fund your housing dreams, Cholamandalam Investment and Finance Company Limited will be your perfect choice. With over 46 years of experience and excellence, our 54,000+ employees serve over 36 lakh+ customers across the Indian subcontinent. Our 1,380+ branches expand over every nook and corner of the country providing seamless accessibility. For any queries feel free to contact us at 1800-102-4565 or walk into any one of our branches. Explore our digital interface for more exciting updates!