We are witnessing home loan rates like never before. The Indian government and lenders operating in the country are going the extra mile to make home loans more attractive. All of these may prompt you to jump for a loan right away. However, if you want to get the most from your home loan, asking yourself the following questions will help you make an informed decision.
Question 1 – Am I Prepared For the Financial Commitment?
A home loan is a long-term financial liability. Borrowers usually opt for a repayment term between five years and thirty years. Hence, before applying for a home loan, you should evaluate your finances and decide the loan amount. While determining the amount, you also have to consider the interest rate. The higher the home loan interest, the more the EMIs. A home loan interest calculator can give you an accurate estimate of the loan amount and make loan selection simpler.
Question 2 – Can I Make a Higher Down Payment? What are its Benefits?
When you apply for a home loan, the lender approves an amount between 75% and 90% of the property value as the loan. To reduce the chances of default, they expect you to make a minimum 10% down payment. If you want to reduce the EMIs and get better interest rates, you should increase the downpayment amount by as much as you can afford. A higher downpayment amount assures the lender that the chances of defaulting are minimal, and hence, they do not mind giving you a discounted interest rate. You can use a home loan interest calculatorto calculate the loan costs.
Question 3 – Will I Have to Sacrifice Other Financial Goals?
As a home loan is a significant financial commitment, it may mean sacrificing other aspirations like weddings, education, a motor vehicle, etc. However, if you plan properly, you will never have to sacrifice other aspirations to fulfil your housing dreams. Lenders like PNB Housing offer ultra-low home loan interest rates and an extended loan term of up to thirty years. Hence, the EMIs will never seem like a burden. An intelligent way to handle home loanEMIs is by opening a non-cumulative fixed deposit account and choosing the monthly interest payout mode. As you get a fixed monthly income every month, you can use that amount to repay home loan EMIs.
Question 4 – Is My Lender the Best?
As a borrower, you may sometimes feel confused, as home loan advertisements may easily entice you to make a wrong decision. While the interest rate is a key determinant, you should also look at other factors like the lender’s reputation, loan terms, foreclosure and prepayment charges, and other value-added benefits. It is better to trust a lender with a legacy of more than twenty years, as they take their reputation quite seriously and may have bigger resources to offer you the best loan terms. PNB Housing, for instance, offers doorstep service to all home loan applicants. Hence, you will never need to waste a day when you need funds to fulfil the most precious dream of your life – purchasing a house.
The four questions mentioned in this article can make you a confident borrower. You should also read as many articles and blogs as possible to ensure you are making an informed decision. As a golden rule, it is better to ask questions in advance than to regret the decision later.