Buying a home is an asset whose value keeps on increasing with time. For many, it is a dream to own a property and get rid of all the issues concerning rent. There was a time when owing such a private property was restricted only to the wealthy section of the society, but time has changed. Thanks to home loan, the dreams of many have now come to reality, even if they do not have cash ready at hand. Moreover, this is a significant loan that acts as a driving force behind the Indian residential real estate market. You can also use the loaned amount to buy land and undertake construction and also renovate an existing property. However, there are many other rules as well as facts about home loan
Lending Amount
If you are applying for home loans in Chennai, the financial organisation will lend 75%to 80% of the value mentioned in the agreement. The borrower has to arrange the rest of the amount from personal resources.
Change of Interest Rate
The rate of lending for home loan can change from time to time, depending on the economic state as well as existing liquidity in the market.
Eligibility Criteria
A borrower is allowed to opt for home loan, only if he or she is eligible for certain parameters. You need to take into consideration and evaluate factors before selecting the best option, which include number of working years left,repayment ability, cash flow needs and processing fees.
Loan Tenure
The tenure can be from 5-20 years and on the basis of it the rate of interest varies. However, if the tenure is for longer span the interest rate keeps on increasing.
Verification Process
Financial organisations study the credit history of the applicants before accepting their request. They verify whether the intended borrowers have any record of defaults with other financial institutions. The organisations also look into the type and age of properties and also if there are existence of other loans.
Back-up Plan
There are banks that make it a norm for the borrower to take an insurance policy to protect the home loan. This ensures that if the borrower dies without being able to clear the debt, the insurance can get their money back.
Fixed Interest and Floating Interest
In case of fixed rate, the interest amount is fixed for the tenure of the loan, whereas in case of the other one, the rate is benchmarked to a retail lending rate of the institution. So, the interest rate depends on the prevailing market conditions. It is better to go for fixed interest rate because the amount remains stable, irrespective of the economic condition.
Other than these 4 there are many other facts, which are very important for a borrower to know before applying for a home loan. So consult an expert before finalising the most suitable home loan option.
