Guide To Choose the Right Home Loan
One of the most crucial aspects of availing of a home loan is selecting the right loan provider. A few of the most necessary aspects of choosing the lender are discussed here in this blog to assist you in making the correct decision. Buying a home is looked upon as the biggest buy by most individuals. Most buyers depend on home finance from the Central Bank of India home loan, Bank of Maharashtra home loan or any other home loan lender to meet their long-standing dream of becoming an owner of a home.
As a home loan is looked upon as a big-ticket credit option, it is necessary to be thoroughly careful when deciding on the lender. In case you are one of those struggling with the decision of deciding the apt lender, here are some of the pointers that may help you –
HFC or bank?
You can avail of a home loan from a private or public sector bank or HFC (Housing Finance Company). While Housing Finance Companies or HFCs hold a good reputation for being extremely flexible about the eligibility parameter, the rate of interest offered by these lenders is linked with the prime lending interest rate, which can, at times, be high as compared to the rate of interest offered by the banks.
Also, this means it may take longer for the HFCs to pass on the Reserve Bank of India’s rate cuts to you as a borrower. In a declining interest rate regime, this can prove extremely costly for you as a borrower. Even if you consider processing charges or other fees, HFCs usually are costly as compared to banks.
The floating interest rate or fixed interest rate
Whether you avail home loan from HFCs or banks, you will have to select between floating and fixed interest rates for a home loan. As suggested by the name, with a fixed interest rate loan, the rate of interest stays the same across the repayment loan tenure. If you opt for the floating interest rate, the rate of interest will fluctuate as per the market conditions and even affect the monthly loan EMIs.
It is usually advised that you, as a borrower, must avail of a home loan with a floating rate of interest in a declining rate regime. However, if you are looking for more certainty regarding monthly expenditures and budgeting, you may go for the fixed-interest rate loan. Note that maximum lenders permit you to convert your credit option from a fixed interest rate to a floating interest rate or the other way around if you place a request for the interest rate conversion.
Before you place the application for a home loan, you must even closely analyze the lender’s eligibility parameter. While the loan requirements differ from lender to lender, they are mostly based on parameters like your monthly income, age, credit score and existing liabilities. Opt for a lender with a lenient eligibility parameter, which you can comfortably repay. Post applying for a home loan, if the bank lender finds that you do not mitigate your eligibility needs, your application for a loan is mostly turned down.
Also Check and Apply: Bank of Maharashtra Home Loan
As the home loan is usually availed for a repayment tenure of 15 to 30 years, you as a borrower will require having a good long-term relationship with the lender. Thus, it is even crucial to factor in the additional features or facilities that are provided by the lenders. For example, a few lenders provide step-up loan options, which help enhance your loan eligibility chances.
Customer service support is the next important consideration before choosing a lender. The EMI repayment flexibility, credit option approval duration, and documentation are certain important parameters that must be paid attention to.
Selecting the best lender
Top Indian lenders are known to provide home loans at an attractive rate of interest while even permitting you as a borrower to select between the fixed and floating rate of interest. With benefits and features like digital loan sanction, world-class support, and PMAY subsidy, such loans ensure that your experience of availing and repaying a home loan must be very simple and highly convenient.
You must compare the banks of your choice based on the above points mentioned. Doing so will help you to make the correct decision and meet your dream of becoming a homeowner early in your life.
Read on here some of the home loan tips too, which you must be well versed with before opting for a home loan from the lender of your choice.
Start by saving adequately as a down payment.
Planning for your financials is important when you are looking to purchase a home. Your month-on-month budget must be established to accommodate a specific amount of money, which you must put away as a down payment. This specific amount must range up to 20 per cent of the home purchase price based on the loan type you are looking to opt for.
An ideal way to simply put away this amount monthly is automatically parking from your savings account or paycheck to the savings bank account. In this manner, you will not get tempted to touch the parking you have decided to put aside in the form of a down payment.
Check out your credit score.
Great deals and offers on home loans are provided to those with a strong credit score. Having a strong credit score assures lenders of your credibility, which makes them confident about your repayment capacity. So, what must you do to ensure that you have a great credit score, which may make you eligible for a good deal? Firstly, you must get a copy of your credit report, which will make you know about your credit profile and what it looks like to the potential lender. If you know your score from before, then you may take measures to improve it to avail a good home loan deal at a lower rate of interest. Ideally, your credit score must be over 750 so that you are provided with a good interest rate on a home loan. As per CIBIL, those with a score of 750 and more have a chance of around 80 per cent to get home loan approval.