Home Loans: 6 Important Factors To Consider

 The silent financial and banking revolution has made it very easy to avail a home loan in India. Besides traditional banks, there are many other players offering home loans. Competition in the sector has provided a hoard of opportunities for prospective home buyers to choose from.

Before Approaching a Home Loan Provider

All factors need to be considered before deciding upon a home loan provider. You should have basic knowledge about the three pillars of home loans.

The Three Pillars

i. Loan eligibility calculation.

ii. Documents to be produced.

iii. How monthly installments are calculated. 

How to Use Them?

Understanding these three tenets of home loans will be to the advantage of the loan takers. These tools will help you to select the best provider and the most advantageous scheme.

Meeting a professional company having great experience in home loan related matters will simplify the process.

The Criteria Used by Banks To Disburse Home Loans

It is a misconception that banks look at only your income to give a home loan. There are many factors which they consider before processing the loan application.

They can include:

i. Where you work.

ii. History of employment.

iii. Nature of job.

iv. Age.

v. Present liabilities.

Proper Financial Advice

A seasoned home loan consultant will take these and many other factors into consideration before selecting the best home loan package for you.

6 Factors to Consider Before Taking a Home Loan

Having a thorough understanding of these factors will have a great impact on your home loan from the beginning itself till the repayment is done. 

1. Eligibility

After the financial institutions have been shortlisted, use the tool called ‘home loan eligibility calculator’ to discover your entitlement to avail the loan. You will also be able to find out the eligible amount. 

2. Loan Amount

The home loan amount is directly proportional to your repayment capacity. For this, the banks will calculate the EMI for the amount applied for. It should not be more than 50% of your monthly income. 

3. Get Ready With The Paperwork

The papers that you submit will decide the fate of your application. Sometimes the financial companies can ask for additional documents. So it is of utmost importance that your get all the required papers including land documents ready before approaching a bank. Some of the common documents are:

a. ID proof

b. Salary certificate

c. IT form 16

d. Address proof

e. IT returns

f. P&L statements

g. Bank statement

Your finance advisor is the best place to get in depth information about these KYC documents. 

4. Meticulous Research

Ensure that you make a comparative study about all the schemes available with various financial institutions. This research should include the following important calculations:

i. Repayment period.

ii. Down payment.

iii. EMI.

5. Fees And Rate of Interest

Banks can take service charges for processing your loan. There is no fixed amount for that. The interest rate is also another key factor which will have long term impact on the loan. These two items can be discussed with the bank before moving forward.

6. Go Through the Fine Print Carefully

You are required to sign an agreement before the loan is processed. Irrespective of the volume of the document, you should read it very carefully. It is a good practice to ask a professional home loan processing company to do it for you. 

Drafted By:
CS.A.Maniraj.,B.Com.,ACS.,CA(Fin), Independent Director 
Certified CSR Professional., Certified GST Professional.