Owning a house is one of the biggest financial decisions your household will ever make. For the majority of first-time home buyers, availing a mortgage may be the only way they can bring alive their aspirations of home ownership.
If you are planning to take a home loan, it’s important to understand about it; in the end, it’s a commitment that will run into years till you can repay the entire loan amount. Listed below are things you should know before you make application for any mortgage loan:
Things you must know before you decide to avail a mortgage
ELIGIBILITY CRITERIA
The first step you need to take would be to make certain that you qualify for a hdfc home loan At the start, lenders will examine your eligibility for home loan on the basis of your earnings and repayment capacity. Another important considerations include age, qualification, budget, selection of dependants, spouse’s income and job stability.
TYPES OF HOME LOANS
ADJUSTABLE/FLOATING RATE LOANS:
In this type of loan, the interest rate is from the lender’s benchmark rate. If there is a change in the benchmark rate, the eye rate also changes proportionately.
FIXED RATE LOAN:
In a fixed rate loan, the interest rate is fixed during taking the loan. This interest rate is applicable through the tenure of the loan.
COMBINATION LOANS:
These loans offer a part of the loan at a fixed interest and part at an adjustable or floating interest.
HOME FIRST OR LOAN FIRST
It is recommended to get your home loan pre-approved before you decide to decide on your home. Pre-approval can help you fix your exact budget and makes your house search focused. Pre-approvals even assist negotiate better and close deals faster. You can also talk to the lender about the availability of good properties in your preferred locati upon. In fact , there are some projects that are approved by the financial institution, which not only relaxes the quantity of property documents needed by the lender, but also assures you of the grade of the jobs.
LOAN AMOUNT
As defined by the regulator, most lenders give a housing loan including 75 to 90 percent of the price of the house depending on your loan value. If you include a co-applicant, his/her income can be by the loan provider to raise the loan amount. The co-applicant could be your adult child, parent or spouse. The total amount payment towards purchase of the house is anticipated to be contributed by you. For instance, if the property can be definitely valued at Rs 50 lakh and you have been sanctioned a mortgage of Rs 35 lakh, your contribution will be the balance Rs 15 lakh. You need to use a property loan eligibility calculator to be sure of your eligibility for home mortgage.
COST OF YOUR HOME LOAN
The cost of your housing loan can also be one factor to take into consideration while assessing its suitability. The high cost will include the interest payments, processing fees, administrative charges, prepayment penalties, etc . Ideally your mortgage loan should have zero prepayment charges for adjustable/floating rate loans.
EMI stands for Equated Monthly Instalment. This is the amount you need to cover towards the lender each month. It includes repayment of the key amount and payment of the eye within the outstanding quantity of loan.
Pre-EMI is a concept that can be used for properties which are under construction. In cases like this, you get your loan disbursed in stages based on the instalment amount you should pay the developer. You are generally required to begin pay ing only the interest on the loan quantity disbursed (called the pre-EMI interest). In the event you desire to get started on principal repayment immediately, you might opt to tranche the loan and begin paying EMIs on the cumulative amounts disbursed.
Documents needed for a mortgage could be categorized as:
KYC DOCUMENTS:
These include your identity and address proofs. Some documents that you could submit because of this requirement include a valid passport, voter ID card, Aadhaar card, etc .
CREDIT/INCOME DOCUMENTS:
These documents help the lender determine your loan eligibility. If you are employed, you can submit your salary slips of the last three months; if you are self-hired, you can submit tax returns along with computation of income of the last 3 years.
While you need to submit your KYC documents and credit/income documents along with the home loan application to avail the mortgage loan approval, you will need to submit the property documents in original to actually get your mortgage loan disbursement.
INSURANCE COVER
You must purchase a loan cover term assurance plan that will cover the mortgage amount. It’s important to seek information to determine the best mortgage loan insurance available. This will relieve your family from the liability of the outstanding loan as the loan is repaid by the insurance provider just in case something unfortunate happens to you. In fact , several lenders will insist which you purchase insurance during availing the home mortgage.
CONCLUSION
Purchasing a house is a big step; it can be one of the most satisfying experience you should have in life. A mortgage is among the best ways to help you own your own house.
