Home Loans are secured financial instruments that help people fulfil their dreams. Buying or making a home is a costly process, and people save money for their whole lives to own a home of their own. Several government schemes help a lender get the loan or get subsidies on their loan interest charges. Home Loans are tailor-made for people to have a home of their own. The interest rates are generally not so high in home loans because the loan amount is huge.
There are a few things that you should check with the lenders before availing a Home Loan.
So, below you can find everything you need to know before availing Home Loan up to 25 Lacs.
- Know your needs: Home loans involve a huge amount, and people sometimes take a lot of extra money they may not need. And think that they could return the amount later. But you should know that for every penny you take, you’ll have to pay interest charges on that amount. So, the more loan you take, the more will be your interest charges. You can start with deciding whether you’ll purchase a furnished flat, purchase and remodel a place, or build a place from scratch. In any of these processes, the time involved will be different, the money used will be different. And you need to plan the expenses properly and prepare a draft of all the expenses involved. It’ll help you decide how much loan you need.
- Know your limits: Your limit will depend on your income. A Home Loan amount is huge, even though you’ll be repaying the amount in EMI’s. You shouldn’t pile up a huge amount of loans that can drag you for decades. Later on in life, you don’t know what your financial status will be. And if you have a huge EMI to pay every month for such a long time, like for 20-30 Years, you might end up broke or extremely frustrated, and the lender will simply be earning a regular income of your incomes. So, you should draft your expenses and loan amount based on your limits. And not on impulse, which you may end up regretting in the future.
- Find the right institution: You must find the right institution that can offer you the loan at good interest rates. Since the amount involved in Home Loans is huge, many leaders add up many hidden charges with different names. And when you sum up all of these charges, you could find yourself paying a lot of extra money for nothing. So, you should look for a lender who has a good reputation. You should also look for lenders with some basic features like flexible repayment options, prepayment options, etc. These are some of the crucial features that come in handy in the future with the loan. Some lenders charge huge penalty fees for prepayment of loans, which becomes very inconvenient for the lenders. So, you should check these things beforehand.
- EMI: Equated Monthly Instalments are the best way to pay off the loans. But you should make sure your EMI amount is not very less or very large, because in both cases, you could find yourself in trouble in the future. If your EMI amount is too less, that means you have spread your loan amount for a very long time. In such cases, the interest charges are very high, and the borrower may get frustrated paying off the EMI 10-15 years after. Then in the other case, the EMI amount can be huge, which can be very troublesome for the borrower to pay off in a few years, with rising expenses and everything. And changing your repayment scheme after a few years could attract a penalty from the lender. Therefore, to avoid any of the above scenarios, you should plan your EMI amounts according to your capacity and needs.
- Documentation: When taking the loan, you must read the terms of the lenders properly. There is a lot of documentation involved and a lot of points in the contract. A borrower must thoroughly go through it all and should never sign the documents on impulse. Such things may not be a problem if you choose a very old and reputed lender, who by himself may explain the terms of the contract to you.
This was the proper procedure that a person should follow when availing of a loan. A home loan is a prevalent financial instrument provided by a lot of lenders. So, a borrower should never in a hurry choose any lender. Such things should be done slowly and carefully.