It was predicted that the financial year for 2019 would witness a rise of 17% to 19% in housing loans, as a result of the affordable housing schemes and CLSS extended by the government. Though the process of availing of housing credit has been simplified considerably, borrowers still need to consider a few things in advance to ensure that they make the most of their availed advance.
Things to check out before applying for home loans
Considering that housing finance is a long-term financial commitment, the financial consequences are also long-term. Subsequently, potential borrowers need to put in substantial thought before availing a housing advance. Here are a few aspects they should consider before taking home loans –
- Loan value: Intending borrowers should find out if the home loan value that they wish to avail would be sufficient to purchase their chosen property.
Consequently, they should figure out if their choice of HFC extends a top-up loan facility to home advance borrowers that will help them meet their ancillary cost. They should also find out the necessary process and costs involved to avail additional credit facilities.
- Loan type: Similarly, they should figure out which home loan interest type – fixed or floating suit their requirement. Such a piece of information ensures that the availed rate of interest is subjected to market fluctuations or not. With a detailed idea about the interest rate, calculating the EMI in advance is feasible, thereby preventing any unforeseen expenditures.
- Eligibility: Prospective borrowers need to check the housing loan eligibility to gain a fair understanding of their chances of availing it. They can further use a trusted home loan eligibility calculator to calculate the same. However, it must be noted that there are several factors that can affect their home loan eligibility.
Also, the eligibility criteria for housing advances vary from one HFC to another. Potential applicants should learn about them before applying for housing credit.
- Rate of interest and repayment options: Housing advance interest rate and the repayment option are quite vital while taking a housing loan in India. Intending borrowers should compare prevailing interest rates and also find out the financial consequences of switching from a fixed to floating interest type or vice versa between tenor. Subsequently, they should opt for a flexible repayment option.
- Tenor: Contrary to popular belief, picking a suitable tenor is essential considering the impact that it has on the repayment procedure and structure. For example –
- A longer tenor – Is ideal in case a borrower has other substantial financial responsibilities at the current time.
- A shorter tenor – Is best suited for those who can afford to make substantial EMIs.
Both of these tenor types come with their set pros and cater to the current financial stability of the borrower in the discussion. Besides, considering that an individual opts for a suitable lender, they can avail add-on facilities of part prepayment and foreclosure, in case they come upon a considerable amount any time during their tenor.
Along such lines, borrowers can avail a substantial housing credit at a competitive interest rate and convenient tenor by availing a loan from HFCs like Bajaj Housing Finance Limited.
- Documentation: Additionally, applicants need to figure out the list of all documents they would need for a home loan. Typically, applicants would be required to provide their KYC documents serving as proof of address and identity.
Also, proof of income like bank statements, salary slips or financial statements, form 16 and photographs will have to be submitted. Regardless, it must be noted that HFCs may ask for other vital documents.
- Balance transfer facility: This particular housing loan facility often comes in handy for borrowers as it helps them to transfer home loan balance burden to another financial institution with a lower interest rate.
Also, with this facility, housing advance borrowers can further avail additional credit on their existing loan in the form of a top-up credit. Hence, borrowers should check if their HFC extends this facility or not and what are the charges involved with it.
Besides these, intending borrowers should learn about the tax benefits they would be eligible for and the charges that would be levied to process the housing loan. Once they have availed detailed information about these aspects, they would be able to select a viable credit option to finance their housing property.
