5 things to know before you take home loan.

Home loan

5 things to know before you take home loan.

Friends it's a dream of everyone who doesn't have his own house, to own a home someday.

Buying a house is one of the biggest financial decisions, a person makes in his lifetime.

Given the rate at which inflation is galloping, buying a house has become very difficult, in metros the conditions are even worse.

But thanks God we have got home loans to our rescue, friends since you are reading this post, it means you are zeroed upon a property and looking to take home loan.

So friends, through this post I will tell you five things that you should know before taking home loan.

1. Fair value of your property.

Friends its very important, that before buying a property you should estimate it's fair value.

You should do thorough market research, about site location, nearby property rates etc.

If you are not finding out fair value of the property, then you will end up paying higher price for it, for which you will have to take more home loan.

Many a times people take home loan, which is difficult for them to pay back.

So estimating fair value of property is the first step before taking home loan.

2. Expenses for home loan.

The second thing that you have to consider while taking home loan is the extra expenses that comes with it.

This extra expense is also called as documentation charges for home loan.

This includes processing fees, mortgage fees, other charges.

These expenses vary from bank to bank.

Friends normally it is seen these charges are 1% - 2% of your loan amount.

For eg if your loan amount is 20 lakhs then these charges can be between 20k to 40k.

So go with the bank whose expenses are less while taking home loan.

3. Home loan interest rate type.

Friends the next thing to note, is the home loan interest rate type.

Friends home loan interest rate is charged under either fixed rate or fluctuating rate.

If your home loan is under fixed interest rate then throughout your loan tenure you will be charged a fixed rate of interest, and your emi will remain same throughout your tenure.

On the other hand if your home loan is under fluctuating interest rate over the time your interest rate would increase or decrease.

As a result your EMI amount will also increase or decrease.

4. Repaying capacity of home loan.

Friends it is very important you ask yourself, whether you can repay the loan amount.

Often it is seen that people end up taking home loan above their capacity, as a result they struggle to pay their monthly EMI.

Ideally your emi should be not more than 25% of your salary.

For eg - if your salary is 40k then EMI should not exceed 10k.

In this way you will not run into rough weathers.

5. Compare interest rates.

Friends while taking home loan it is very important to compare interest rates provided by different banks, only after comparing you should take home loan.

Even a difference of 0.10% can help you save thousands of money in long run.
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