Home Loan
To make your home loan journey a smooth sail, in this article we will help you to know eligibility criteria, rates of interest, process, necessary documents, EMI comparison and transfer for lowest rates.
Home loan is really critical and important financial decision in our lives. Before you finalise your bank to secure home loan, try to get more information on current interest rates from different banks. First, gather some more information about how much each bank can give you. Find out eligibility for government and private banks. Which interest rate is more flexible and affordable such as fixed rates or floating rates? What is more easy a prepay option or balance transfer? We try to give answers to all such questions, and make this home loan process simple for you. To find the lender for 20 years term go through the fine print and save for years to come. A perfect Home loan is loan which gives you lowest rates throughout the tenure, has part payment options and allows you to balance transfer if you wish to.
The borrower's eligibility of getting a housing loan depend upon his/her repayment capacity & the banks establish this repayment capacity by considering various factors such income, spouse's income, age, number of dependants qualifications , assets, liabilities, stability and continuity of occupation and savings history. Eligibility Factors in Housing loan Your Home Loan eligibility is determined by your repayment capacity and the value of the Property.
Tool - Home Loan eligibility calculator helps you in calculate your loan amount on the basis of your income / salary.
The most important concern of banks in determining your loan eligibility is that whether or not you are contentedly able to pay off the amount you borrow
Banks are okay to fund 75-85% of property value but with the condition that you have income capacity that you can pay its Emi each month.
Banks are okay to fund 75-85% of property value but with the condition that you have income capacity that you can pay its Emi each month.
When you avail a home loan EMI is calculated either on fixed rate of interest or according to the floating rate of interest. Before finalizing either, you must take a note of both the patterns and take a well-calculated decision. Generally, home loan is taken for a longer tenure compared to other loans such as personal loan or car loan. You borrow the loan for at least for10 years and maximum upto 30 years. In such scenario, you end up paying a huge amount as interest on your principal amount. Therefore, the difference of 0.5% can make huge impact on your overall interest amount. Let's take a close look at both the patterns of interest.
Generally, in fixed rate of interest, the percentage of interest is fixed for whole tenure and same percentage of interest is charged throughout the loan. It makes the EMI payable at a constant sum throughout the tenure. Therefore, it is always recommended that you opt fixed rate of interest only when the rates are bottom down and if an upward trend is expected.
Floating rates of interest changed with the market lending rates. Therefore, these rates are prone to fluctuations. The interest rate on your EMI might get increased or decreased depending upon the fluctuation in the market lending rates. In this case, bank provide an alternative to increase the tenure of the loan, at a constant EMI, for the borrowers who do not desire their EMI to be increased in case of higher interest rates.
While applying for a home loan, the most important question is rate of interest. One more thing, which is equally important is how interest is calculated by respective bank. Banks are required to quote interest rates on a 'reducing balance' basis. Let's take a look how this whole formula works:
You have taken a loan of Rs. 1 lakh for a period of one year at an interest rate of 10.00% per annum, on a monthly reducing balance basis. In this situation, you will pay 12 equated monthly instalment's (EMIs), with a part of each EMI going towards repaying the principal amount borrowed (Rs 1 lakh), and the balance towards servicing the interest on your loan. What is important to note is reducing balance calculation is the interest component of your EMI keeps changing, from a high initial amount in the early part of your loan, to a nominal figures as the loan comes to an end.