Buying a dream home means adding an asset that will count on your future.
Taking a home loan consists of three motives: firstly, either you want to buy a new home, second is to build your own home, and thirdly, you may wish to renovate your old home. Now which motive suits you the best is entirely up to you.
When you decide to take a home loan, you are committed to paying a specific equated monthly installment (EMI) every month. Hence, the percentage stands near 60 percent to 65 percent of the amount you need to pay from your salary every year. This may take about 30years to complete the EMI payment process.
If you want to get the best home loans in any part of the world, you need to seek a quality home loan advisor’s assistance to make the correct decision.
You need to pay the home loans irrespective of the current financial status of your family. You cannot afford to pay the home loans in your entire lifetime.
Essential guidelines for home loans in 2020
Whenever you wish to take the home loans, you need to seek a proper advisor’s assistance. Hence, let’s find out some of the essential points that you need to keep in mind while taking home loans.
1. Estimate the home loan tenure and eligibility
The most common mistake people often commit in case of home loan they take the longest tenure equated monthly installment (EMI). To maximize the loan amount and reduce the EMI rate people seek long term EMI loans.
At this point, you commit the biggest mistake. The reason is you need to pay EMI for the entire 30 to 40 years of your life and 60 percent to 65 percent of your salary is gone.
Hence, you need to take care of the following facts to opt for the best option that can be comfortable for you.
- You need to calculate how much EMI you can pay comfortably. It must not be 60 percent to 65 percent of your take-home salary.
- Consider your age limits to meet the eligibility criteria for taking the home loan. The best thing is to opt for the shortest loan tenure to pay the loan comfortably.
2. Check the approval status of your property
Ensure that the property is registered in the name of the seller. In the case of the self-constructed property, the approved plan of the map must be available with the seller. There are some banks that approve up to 150 percent of the registered amount with respect to 75 percent of the market in your business.
The bank never approves loans or funds those properties that are located in the gram panchayat area and are without any approved building plan.
3. Make your choice on the basis of fixed-rate or floating rate
Floating rate loans are better than the fixed-rate loans as they vary from time to time. But in the case of fixed-rate loans, you need to pay the fixed rate of interest all the time.
If your current financial status is very strong then you can opt for the fixed-rate loans. Fixed-rate loans come with a higher rate of interest compared to floating-rate loans. If you fail to pay the amount then there will be higher penalty charges on you.
4. Choose the best and authentic bank for home loans
Before seeking the loans from the bank first make a thorough cross-check of the current status of the bank. Read the customer reviews and the ratings of the bank from the past customer feedback who have taken the loan from the bank in the past. Their shared reviews can help you to make correct decisions and avoid common mistakes.
You need to know the base rates trend of the banks. This will reveal that the bank changes the loan rates very often or not. You also need to seek the information that the bank provides facilities to its older customers by lowering the EMI rates.
You need to compare the offers as always the cheap rates are not the best rates that you can consider to take.
5. Prepayment and the home closure charges
You need to select such a bank that provides you the opportunity to prepay your loans without any charge or hassles.
As per the directives of the RBI, banks cannot charge any money for the prepayments of the loans.
How can you reduce your home loan EMI?
Taking home loans is easy but to repay the EMI’s is difficult. Along with that, you need to pay the interest on a constant basis to repay the home loans.
This is the reason why you need to plan your ways to keep reducing the load of repaying the EMI’s from your shoulder. You need to think in a logical manner regarding this to get the best solution to this problem. You need to be a proactive decision-maker in this regard.
Therefore let’s explore the different ways to reduce the EMI loans from your shoulders very easily.
1. Opt for a higher down payment: If you choose to pay a higher down payment then the load of interest on EMI will get reduced to a great extent. You will have to pay a lesser amount of interest later. The burden of EMI will also become lesser on your counterpart.
2. Choose Loan with a longer repayment tenure: You need to choose the EMI that has a longer repayment tenure.
The best thing it will do for you is it will reduce the chances of paying a higher interest rate later on your EMI. Hence it will reduce the burden of paying higher EMI from your shoulder.
On the other hand in case of short-term repayment tenure, you need to pay the highest interest rates to the bank and you cannot ignore it. Hence an extra burden you need to carry on your shoulder every month.
3. Consider taking loans from the existing banks: When you seek a loan from your existing bank then chances are there that they charge lesser interest rates of EMI from you.
The reason is you are their old and existing customers. Hence, you can also apply this strategy to reduce the interest rate of your home loan EMI. You need to act smart and scroll down your options to repay the EMI.
4. Negotiate with the bank: You can negotiate with the banks to get paid lower interest rates on your EMI. Sometimes banks provide opportunities to their existing customers to pay a low-interest rate in their EMI. Hence, you need to scroll down your options to get a better advantage.
Conclusion: Essential guidelines for a home loan to secure great deals
Hence, from the information mentioned above, it has become clear that you need to be careful while seeking home loans.
There are certain facts that banks will nor reveal to you directly. But they will disclose it to you in the future. You need to go through the reviews, feedback of the previous customers to make the correct decision regarding your home loan.
Be cautious about your choice and you can also get the assistance of a home loan advisor to seek the best loan offers. It is your dream home and you should carry a long-term loan burden.
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Ujjal Mondal is a freelance content writer and enthusiastic blogger. She is the co-founder of (financeteam.net). She contributes to many authority blogs such as (sbnewsroom.com)