Things To Know Before You Apply For Home Loan
Once you have finalised home of your choice, its time to look out for a suitable home loan offer. There are various factors that one should consider before opting for a home loan finance from banks. Here are few of them-
Applicant's eligibility is one of top factors that has to be considered when applying for home loan. Banks judge the applications as per the monthly income of the applicant and the cost of the property. Usually, banks offer up to 80 per cent of the property cost depending upon the repayment capacity of the borrower. However, in a recent notification, Reserve Bank of India allowed loan to value ratio up to 90 per cent for home loans amounting to Rs. 30 lakhs or lower.
Research extensively before choosing a lender because interest rate plays a key role in setting your monthly instalments. Try to find the lowest interest rate on the loan along with other facilities of switching from floating to fixed. Alternatively, applicant should also decide whether you want to take a loan with a fixed interest rate or a floating interest rate.
Banks charge fee for managing loan application. This can range anywhere between 0.25-2 per cent of the total loan amount. Applicant should also find out about the loan prepayment terms from various loan providers before settling on one. Choose a lender that offers the lowest processing fee on your loan.
Interest Rate Revision
A lender should be quick to implement changes in interest rates of home loans by the Reserve Bank of India. Applicants can get a better deal from those lenders who change rates as soon as policy revisions are announced.
Banks request documents to verify your identity, address, age, etc. in order to process your loan application. Applicants can opt for lender which have minimum requirement or have better documentation policy such as online uploads or doorstep collection.
Usually banks take an average of five days to approve a home loan, assuming that all the documents are in order. Applicants should opt for a lender that has a good reputation with respect to turnaround time and good customer service after the loan is disbursed.