28 June, 2023
4 mins read
Sometimes, an individual can purchase a home entirely on cash or by liquidating their existing investments. Finding the right dream home is just half the battle unless that's the case. The main task is to find the right type of home loan to help fund one’s purchase. Since home loans are a long-term commitment that may stretch up to even 15 to 20 years, picking the right home loan becomes crucial. Opting for the right home loan requires considerable time and effort to plan, research, and consulting a knowledgeable party. In addition, many factors must be considered while deciding on a home loan. Thus, for potential homebuyers planning to buy a house with the help of a loan, selecting the right lender and the most appropriate type of mortgage loan forms a part of the strategic decision-making process.
The demand for home loans has increased in recent years. Thus, banks and other housing finance companies now offer different types of mortgage loans to cater to changing and growing demands of buyers. For a more precise understanding, we can classify the home loan types based on purpose and interest rates.
An individual can opt to apply for a particular home loan based on their need. However, the terms and conditions, eligibility criteria, and document checklist may differ for these types of mortgages. It is thus best to check the eligibility criteria before applying for a home loan.
Also known as adjustable-rate mortgage loans, the home loan interest rates may go up or down. Thus, if interest rates are low, the borrower will have to pay more whenever the interest goes up.
Consider the following aspects before applying for a home loan.
The EMI consists of the principal amount and the interest rate. Selecting the correct type of home loan interest rate hence becomes prudent. Although, as mentioned earlier, floating and fixed interest rates differ and impact the interest payout differently, one should consider the market conditions (whether the rates are likely to increase or reduce) before making a decision.
The loan amount heavily impacts the borrower’s monthly instalments or EMIs. Thus, one must choose a loan amount depending on the repayment capacity. Moreover, with numerous players in the market, lenders might try to lure borrowers by providing attractive offers. Therefore, settling for a loan amount after using a home loan EMI calculator is advisable.
Opting for a home loan for its low-interest rate may not always be wise. There are charges that banks, and other lenders impose on the borrower, including processing and prepayment charges. Processing charges are charged for processing the loan and other expenses incurred by the bank. In comparison, prepayment charges are not levied on floating-rate loans but may be imposed on fixed-rate home loans.
Many banks and housing finance companies offer portability features where the borrower can switch the loan from one lender to another. This can become convenient for the borrower if they do not want to continue with the same bank/lender. However, before switching, one must consider the charges levied and other terms and conditions.
One of the best ways to compare different home loans and offerings is to check the loan fact sheets by different lenders and financial institutions. This gives a broad understanding of the features, fee, period of the loan, amount to be repaid, etc. In the end, choosing from different options is important so that one’s individual needs can be met.
The home loan market is full of renowned lenders and institutions offering attractive offers for different types of mortgages or home loans. With extensively high competition, one must ensure a factor in the above aspects before buying. Also, choosing a credible and reputed lender provides ease in transactions and peace of mind. Discover a dream home with Piramal Revanta! Take an online tour and experience contemporary luxury living with state-of-the-art amenities.
Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim /disown any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.
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