Are you planning for a home loan? Things you should know before applying?

A home loan is a better option to opt for to buy the dream home. The borrower can apply for the long-term duration of loans according to an individual’s need and age. The borrower can apply up to 80% as loans for purchasing a property, while 20% is to be made as a down payment. The loan installment needs to be paid by the borrower on time before the due date failing which the borrower may be charged with a heavy penalty. If the loans being defaulted, the applicant’s property may be defaulted and thus can be sealed. The borrower should submit all necessary documents to the lender to fulfill the loan eligibility criteria and get the loan’s loans sanctioned. The borrower, as per the RBI mandate, should file for ITR returns in case of failing, which the borrower’s loan should not be approved by the lender. The borrower should also have necessary proofs like employment proof, salary slips, and employment letters. Etc.

The borrower’s loan may get rejected if CIBIL ratings are low, or else if the applicant is found to be involved in malpractices, then the loans can be dismissed. The loan terms & conditions should be thoroughly read before applying for the loan as the misleading clauses may lead to the problem to the borrower shortly while repayment of loans. If the borrower applies for the loan from the real estate developers’ approved finance companies, the borrower can get the loan processed faster and efficiently. In case of proper documentation and employment proof, the borrower can get the loans approved within 48 hours. The borrower should opt for a higher duration for loan repayment in case of a lower salary. Otherwise, in case of a higher salary, the borrower should opt for faster repayment to become early debt-free. The honest lenders who repay the loans on time get a better credit score and can get a clear way for the other loan’s approval or credit card approval.

Things to know before applying for home loans:

• Terms & conditions of the loan agreement:

The borrower should keep a thorough check on the terms & conditions of the loan agreement. The borrower should check all the necessary terms & conditions for the loans before applying or signing the loan terms. The borrower should keep a check on the interest being charged by the borrower, the duration for which the loan is being approved, processing fees being charged, the due date of the loan repayment, the penalty is charged in case of default or other prevailing terms of loans to be applicable. If the clauses are found to be misleading in that case, the borrower should request for changes in terms & conditions of the agreement. In case of the lender refusing to change the misleading terms & conditions, the borrower should opt for another lender for the loans.

• Estimate the repayment capacity against the monthly income:

The borrower should take an estimate of the repayment capacity according to the salary of the borrower. Though on the property valuation, 80% of the loan is being approved by the lender also, the salary factor plays a significant role in the sanctioning of the loans as the repayment capacity of the borrower depends upon the monthly salary of the borrower. The borrower should understand the essential requirement needs to run on the daily expenses as different people have a different standard of living, different needs, different types of liabilities. Accordingly, the borrower should take an estimate of the requirements and therefore only should apply for the loans. Along with the interest repayment, the borrower should take an estimate of the monthly installment to be charged to the borrower and should understand the need accordingly and should avail for the loans as per that.

• Check Past track records of the lender:

The borrower should do a thorough check about the financial condition of the lender. As if the lender files for bankruptcy, the loan, if not repaid, the borrower cannot make the property in his name and gain permanent ownership of the property. The borrower should also not be amongst the misleading lender who may charge the exorbitant rates to borrower charges or any deceptive or hidden charges been taken by the lender. The borrower should check the reviews about the lender, whether good or bad, and accordingly only should take the decision.

• Competitive interest rates being charged:

As per the RBI guidelines, the interest rates being charged to the borrower should be identical. But still, in spite of that, different lenders may assign additional charges to the borrowers. The borrower can check for the prevailing interest rates to be charged by the borrower, which may vary, and opt for the lowest interest rates and also lower processing fees to be charged by the lender. The borrower can thus save money on the interest repayment.

Conclusion:

Thus, the borrower needs to thoroughly check with the lender’s overall background whether the lender is stable and amongst the ones who are following ethical practices. The borrower should also ensure that the lender is not indulged in any malpractices or else is involved in recovery through unfair means. The borrower should check with the terms & conditions of the lender and also ensure that they aren’t misleading.