With changes in the financial landscape, buying a home with the help of home loan has become a much easier process as compared to earlier one. However, it is always advisable to choose the right bank for borrowing the loan as many financial institutions offer attractive options but in return, they are not fruitful. They sometimes also lead to many hurdles that make the home buying process a tedious task.
So, in order to ease this home loan borrowing process, an individual must keep in mind these important tips before finalising any bank or financial institution:
Ask for Interest Rates
Every bank charges interest rate when they offer you a home loan. This interest rate directly affects the EMI which you have to pay on monthly basis, as the banks add this interest rate to the monthly EMIs. In India, interest rates on home loan vary from 9-13% depending upon the banks. However, it is advisable that you must not rush on to just one bank and do proper research by visiting different banks. Most of the time, you get the best offer in the last. Also, research on the type of interest rate, which one you want to opt, whether fixed or floating. For a shorter tenure, a fixed home loan is best, while for the longer ones, floating is considered best.
Check Repayment Plans
While taking a home loan, it is mandatory to pay EMIs to the bank or the financial institutions to get rid of your debt. But sometimes due to any financial emergency, you are not able to repay the EMI. In such cases, banks levy strict penalties on the home loan borrower. Some banks charge additional interest rates or some levy heavy penalties on the loan amount. This led to an increase in the debt on the borrower’s liabilities.
So, it is advisable to visit various banks and ask for best repayment plans, so that even if you miss any EMI, you are not levied with hefty penalties.
Check Prepayment Plans
If you think you are running with good finances and want to end your home loan early. Then Beware! Every bank has certain prepayment charges which they levy if you want to foreclose your loan. Banks design the whole home loan in a certain frame of years which may vary from 5-30 years. So, if you have decided to prepay your loan, a bank has to bear the additional costs, due to which they levy charges on prepayment.
However, there are many financial institutions that offer lower prepayment charges. Always search for these banks and choose the best one.
So with these golden tips, your complete home loan journey will definitely run smoothly.