Points to note before taking a home loan

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Purchasing a home is a major life decision, especially with the real estate market holding so much potential. If you’re considering buying a house, it’s important to prepare carefully. Today there are several procedures involved in getting a home loan. Here are some steps you should follow if you’re taking a home loan.

Look for a property that fits your budget

Based on your income and repayment ability, look for a house that you can afford to buy. It’s crucial to know the equated monthly installment (EMI) you’re likely to pay towards the loan.

Down payment estimate

Home loans are not fully financed to cover the cost of the property. They can go up to 75%-90% of the property’s value. The loan-to-value ratio varies depending on the loan amount. Loans of up to Rs 30 lakh, Rs 30-75 lakh, and more than Rs 75 lakh are financed up to 90%, 80%, and 75%, respectively, of the property cost.

As a result, you’ll need to pay the home seller a 10% to 25% upfront. Because the down payment might be substantial, you should start saving for it a few years before applying for a home loan.

Is a down payment only obligation?

No! You must also pay the house loan processing fee, stamp duty, and registration fees in addition to the down payment. Now, legal and technical verification charges may or may not be included in the processing.

You must pay for them separately if these are not included in the price. In total, the processing cost amounts to 0.25% to 1% of the loan amount, including Goods and Services Tax (GST). To achieve maximum customer stickiness, some lenders set a fee ceiling. The stamp duty and registration fee, on the other hand, are based on the property’s market worth.

What next after down payment

Approach the seller and request the property documentation from the appropriate person. They may not be able to provide you with the original documents, so ask for photocopies. Read the paperwork thoroughly to avoid any issues when the legal team comes to authenticate the property you want to purchase.

If the seller in question refuses to give you duplicates of the property documentation, move on to the next seller. If you don’t understand the legalities, get assistance from individuals who do. After that, you should pay the required down payment and sign the agreement to sale with the vendor. The details of the property transactions between you and the seller will be contained in that agreement. It will also state that the property will be handed to you promptly. Keep the receipt for the down payment with you for future reference.

Eligibility criteria

You should verify the eligibility criteria of several lenders before applying for a house loan. When you reach the age of 21, most lenders will provide you with a loan. By the time the loan is completed, the applicant’s age must not exceed 60 years (salaried). In the event that it reaches 60 years, the tenure will be shortened. This is done to ensure that salaried borrowers would be able to repay the loan while working. On the other hand, self-employed people can pay off their loans until they are around 65 years old.

Before applying for a home loan, compare interest rates

Because home loans can last up to 30 years, you’ll want to be careful when choosing an interest rate to keep your overall costs down. Home loan interest rates have dropped significantly in recent years. Even so, you should compare and select the cheapest option.