Buying a house is a big decision and a special moment in one’s life. When you decide to buy a home with the help of a loan, before you finalize the property consider the home loan options. Otherwise, it can be disheartening if you are unable to buy the house due to loan disapproval. Before you decide on buying a particular house, you should carry out the preliminary home loan research on your own and after finalizing you can take the final plunge.
Below are some home loan tips for first time home buyer, which can make your home buying experience truly easy and joyful.
1. Plan your EMI & Down payment: The first step in home buying is calculating your home budget and taking the income at disposal for paying the Equated Monthly Income (EMI). This consists of the principal and interest component of home loan. Ideally, you should not consider giving more than 50% of your monthly salary as EMI. Most banks will also consider a similar yardstick, while giving home loan approval. In addition, you need to consider the savings, which you can give as the down payment for your home. You should have 10 to 20% of total property value as down payment. Don’t give all the savings in home buying, keep something for the rainy day too. Home buying is an overwhelming decision and one may get swayed, so planning your EMI and down payment is crucial as this is a long term engagement.
2. Know Your Options: Once you are clear about your loan eligibility, EMI and down payment part, you should start exploring the options at disposal. Browse through different home loan options and go for the one that offers you the lowest mortgage rates. You should ideally check for the finance option for the flat you wish to purchase. A bank may not approve all towers, floors and flats. Then, you should also know if the project in which you are investing has bank loan approval on construction linked plans or subvention schemes (80:20, 10:80:10 etc.). Most banks give approval for under construction linked plans.
3. Fixed or Floating Home Loan: After deciding the plan, your next step should be the kind of loan you wish to avail. You can get a fixed or floating loan. While, in a fixed loan the rate of interest remains the same irrespective of the market rate, in a floating loan it will be market linked. Moreover, in fixed loan the rate of interest is usually 1-2.5% higher as against floating loan. But, the advantage of a fixed loan is that you can plan your monthly budget as it will be a fixed EMI. While, in floating loan your EMI will keep fluctuating. Further, you must note that in fixed loans you will have to bear a pre-payment charge, which is not there in most floating loans. So, weigh your home loan interest rates and options well, and choose wisely at this stage.
4. Decide the Bank: Most nationalized and private banks offer home loan. If ease of documentation is on your mind, then you should try taking the loan from the bank in which your salary is credited or other existing savings bank account. But, if the mortgage rates are higher in these banks, then you should explore other options. In addition, you must take into consideration the bank’s responsiveness, past base rate trend and finally go for one, which offers the most benefits. You should explore if the bank offers top-up loan and in case of pre-payment the charges are nil or minimal.
5. Paperwork in Place & Apply: After deciding the bank, start getting all the paper work in place. You can also or rather must have a co-applicant. Once you have all the paperwork in place you can apply for the home loan.
Unless if the loan is not construction linked, most banks will give the payment in one or maximum three break-up’s. You should ideally try to pay your home loan within 8 years of taking it. Try to put extra income like year-end bonus or Diwali bonus in your home loan account, so that you can live EMI free or plan a second home. If you are planning your first home and looking for flats for sale with genuine deals with home loan options, then check the Valmark properties here. Each of our projects have the required authority approvals, RERA number and bank loan options. We will assist you at every stage and make your home buying experience a truly delightful one.