Buying your own home is a big accomplishment in our life. But the property prices have skyrocketed in the last few years. Now it is almost impossible for the common people to buy a home with one’s own savings. So, most of us prefer to avail a home loan to buy their dream house.
The home loan is the fund disbursed by a bank or any other financial institution to an individual who wishes to buy a house. The interest rate has come down, as a result now it is cheaper to repay a loan compared to what it had been a decade back. Now, with the online application method of home loans, the processing and approval of the loan have also become faster. But, the important factor is, the bank check your credit history and borrowing potential before approving your loan. If you are planning to buy an online home loan, you need to keep in mind few important factors.
The interest rate of the home loan is the most important factor in deciding from where you should avail the loan. If the interest rate is lower, the EMI of the loan would also become lower. There are two types of interest rate, the fixed interest rate, and the floating interest rate. In the fixed interest rate, the rate remains same throughout the tenure of the loan. In the floating interest rate, the rate may change with the changing lending practices of the bank. So before you apply for a loan you should do a detailed research about the rate of interest offered by different banks and other financial institutions. Nowadays, with different portals, it is quite easy to compare the lending rates of different banks with just a click of the mouse.
Processing Fee and Associated Charges
Almost all the banks charge a processing fee from the applicant once the application is accepted. It is a one-time fee that the borrower has to pay. The processing fee of most of the banks is comparable. It is around 0.5% to 1% of the loan amount. But, the minimum processing fee is around INR 10,000 irrespective of the home loan principal. You should find out the lowest processing fee charged by a bank before availing a loan from the banks.
Foreclosure charge or the prepayment charge is the amount levied by a bank for prepayment of the loan. Recently, RBI has banned the foreclosure penalties issued by a bank. So, you should make sure your bank doesn’t charge anything for early repayment of your loan.
The loan tenure is the duration for which the home loan is taken. It is between 5-30 years for most of the banks. If the tenure is of short duration the EMI calculated is of higher value, similarly, the EMI is low when the loan duration is longer. Consequently, the borrower has to pay a larger amount of money when the loan tenure is longer. So, you have to decide how much EMI you can pay per month and fix the tenure of the home loan.
Home Loan Protection Plan
The Home Loan Protection Plan (HLPP) is an insurance plan in which the insurance company settles any outstanding amount of the home loan in the unlikely event of the death of the borrower. It is not compulsory to buy a home loan protection plan. It is the sole discretion of the buyer. If you wish to buy a loan protection plan you need to pay a premium for it, which can be one-time premium or a regular premium charged along with the EMI.
The above was in brief the important factors which you need to keep in mind while applying for a home loan online in India.
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