Things to know before you get a home loan

If you are planning to buy a home, it is likely to be one of your biggest financial decisions. Getting a home loan is one of the easiest ways in these cases. However, you need to take care of certain aspects, when you get a home loan. In case you want a home loan, you should be aware of your commitments. Here are certain aspects you should focus on, when you plan to get a home loan.

Qualifying yourself

 At the outset, you need to qualify yourself for the loan. The creditors are likely to assess the eligibility of the borrower, based on their repayment capacity and income. Other aspects that are generally considered include the financial position, qualification, age, number of dependent people, job stability and income of spouse.

 Have a look into the different kinds of home loans you can choose from:

  • Floating rate loans: The benchmark rate of the creditor is linked to the rate of interest in this kind of loan. In case the benchmark rate undergoes a change, the rate of interest also undergoes a change proportionately.
  • Fixed rate loan: In this kind of loan, the rate of interest remains fixed when the loan amount is disbursed. The same rate of interest is applicable throughout the tenure.
  • Combination loans: In combination loans, a certain part of the loan has a fixed interest rate and the other part has an adjustable rate of interest.

 You would like to get the loan for your home pre-approved, before you choose what type of home you want to buy. Getting the loan pre-approved makes sure that the homeowner remains focused on the budget while searching for the home. Besides, it helps in negotiating better and one can choose the deals in quick time. When you follow this strategy, you can check whether good properties are available in the location you want. In fact, the creditor approves certain projects. It relaxes the number of documents required for the property by the creditor. It also ensures that you can buy quality residential properties.

EMI and pre-EMI

It is important to consider the amount of monthly instalment you will be paying for the loan. This is the amount that the homeowner needs to pay each month to the creditor. The EMI includes the principal amount as well as the interest applicable on the outstanding loan amount. In case you are interested to buy an under-construction property, you may have to deal with the pre-EMI. In this case, the loan amount gets disbursed in different stages, based on the amount of instalment that needs to be paid to the developer. The homeowners gradually need to start paying only the amount of interest on the disbursed amount of loan.