How to choose the best home loan option: Complete Guide

Finding a perfect home is important, but so is finding the perfect mortgage. The mortgage you choose will hold you back for a long time. So check out the tips below to get the mortgage that’s right for you. A home loan is an amount of money that you normally borrow from a bank or other financial institution. Depending on the terms of the home loan, the borrower must repay the outstanding home loan balance transfer of the housing loan plus interest in simple monthly instalments (EMI) over 10 to 30 years.

For most people, owning a home is one of the most important achievements to achieve, as well as a costly endeavour. Living such a dream life requires a lot of work on the buyer’s part, and the only way to make the house fit into your budget is to take out a mortgage.

Some tips while opting for a home loan:

• Start by saving enough for your down payment:

When buying a home, it is important to have a financial plan. Your monthly budget should be set to accommodate a certain amount of money. This amount will be subtracted from your payment. Down payments range from 2.25% to 20% of the home purchase price. This depends on the home loan type and the lender you choose.

A great way to secure money every month is to automatically transfer money from your bank account/salary to your savings account. That way, you won’t be tempted to mess with the amount you reserved for your deposit.

•      Check your credit history:

The best home loan deals are offered to those with good credit. A good credit score suggests that you are responsible for your financial history. This assures the lender that you are a good candidate as a borrower. So how do you ensure that you have access to a creditworthy and affordable option? First, get a copy of your credit report to see what your credit report looks like to potential lenders. Knowing this, you can take steps to improve your credit score. There are various portals you can pay to determine your creditworthiness.

•     Make sure your financial reports are ready:

When applying for a home loan, you will need to obtain and present several financial documents. Having these documents ready and organized will speed up the process. Most importantly, you should have the most recent payslips, tax returns, bank statements, etc.

• Use a home loan calculator:

Home loan calculators are very helpful in figuring out how much you can afford. These simple mortgage EMI calculators are readily available online. These show monthly payments under different scenarios (different house prices, interest rates, down payments, etc.). Potential borrowers can use them to figure out how much to borrow with the salary they are earning.

●      Compare Housing loan offers:

Don’t be fooled by home loans with the same interest rate. Other factors make one loan more expensive than another. For example, points, fees, etc. You should understand all the different factors that determine the price of a home loan.

•     Pre-screening:

A pre-approval is a smart way to see where you stand in terms of the amount you can borrow and the range of homes you should watch out for. Only minimal financial information is required, such as savings, income, etc. Realtors may ask you to be pre-qualified so they know what to look out for.

•     Find the type of home loan that’s right for you:

Just because someone close to you chose a fixed-rate loan doesn’t mean it’s the right option for you. Someone may find that a fixed rate is more predictable and a better fit for him. While someone else may prefer variable rates. It is market-linked and fluctuates about the base interest rate. That doesn’t necessarily mean you should go for it either. The type of home loan you choose depends on your financial situation.

•     Try to reply to the lender promptly

Don’t assume your job is done after you apply for a mortgage. Lenders may ask for additional information. You should provide it promptly. Taking too long to respond to the lender can delay the processing of your loan. This can result in problems with the home you’re trying to buy. In order not to lose your dream home and the security deposit paid; act quickly with your moneylender.

•     Maintain creditworthiness throughout the loan processing period:

After a lender checks your creditworthiness before accepting your application, don’t assume they won’t do it again. You can crisscross if there were any variations. So make sure you have your funds available for the entire loan processing period.

• Read the loan agreement

• Please make sure you have read and understood everything contained in the home loan agreement before proceeding and signing. Study all the terms and conditions.

• Increase bridge funds:

As a borrower, you have to pay a certain amount of the total amount out of your pocket. We recommend paying as much of your deposit as possible to reduce interest on your principal.

After researching the best banks and mortgage lenders, be aware that not all lending programs are suitable for all borrowers.

Before applying for a home loan in India, you should carefully consider the requirements as each individual or bank has different requirements. For this reason, you should choose a mortgage based on your borrowing needs, repayment ability, and cash flow.

Choosing the right mortgage lender is a bit like choosing a spouse. We can’t help you choose a life partner, but we can help you find a financial partner.

Conclusion

There are several factors to consider when choosing a mortgage in India. You need to track the interest rate charged, loanterm, details about home loan balance transfer, and repayment schedule. Since it is a long-term loan, please consider the timing of the start of borrowing and the change in interest rates after that.

Accidental death or disability must also be considered for payment protection. Make sure there are no hidden costs in the form of prepayment penalties, etc. Prefer visiting Piramal Finance to know more about home loans, personal loans, and different investment schemes.