Planning to avail a home loan? Congratulations! You are just a few formalities away from moving into your dream home. Housing loans help you buy the house of your dreams without exhausting your lifelong savings. You can repay the loan in flexible instalments and even avail tax benefits on them.
However, there are certain things that you should consider before availing a home loan.
Here are important tips you must consider by experts.
- Research well
Do extensive research on the options available before you apply for home loan. Inquire who offers the lowest interest rates in the market with the best features. However, apart from this, you must also consider lenders based on repayment tenure, down payment and fees. It would also be best to look for lenders who have an online interface and provide quick assistance in case of doubts and complaints.
- Set a budget
Typically, lenders can approve a housing loan five times your net income. However, you must decide your loan amount based on your affordability. Assess your expenses and current income to determine how much loan you can comfortably repay. You can use a home loan EMI calculator to find the affordable loan amount for you. Ensure that the EMI does not jeopardise your cost of living and you have a sufficient emergency fund.
- Check eligibility and documents
Check your eligibility from the lender’s website to avoid getting rejected. Home loan eligibility is based on your age, qualification, job profile, credit score, profession, etc. You can also use an eligibility calculator to ensure that you are eligible for the loan as per the lender’s standards. Also, ensure to furnish all the complete documents with accurate information.
- Opt for optimal tenure
The tenure you choose can significantly affect your EMI and total cost of borrowing. Therefore, ensure that you opt for an optimal tenure. Unnecessary long tenure would add to the interest outgo and stretch the debt. On the other hand, if you choose a too short tenure, you could face troubles in managing your daily expenses. If needed, take the help of a professional to help you choose the suitable tenure for you.
- Know the charges
It is vital to know about all the charges to be paid for a housing loan. Apart from processing fees that differ from lender to lender, you could also be asked to pay the service charge, administrative or other fees. You must discuss these with the lender and check the frequency of these charges. If these were monthly, it would add up to your EMI.
Before you apply for home loan, you must keep the above-mentioned points in consideration. Also, you must know about the various home loan tax deductions you can avail. As per the Income Tax Act 1961, you can claim tax deductions on the loan principal and interest repayment. Moreover, read the fine print of the loan agreement to avoid any hassle or inconvenience in future. Put your signature on the loan agreement only when you are satisfied with all the aspects of the loan.