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How to plan for a Home Loan?

Going for a Home loan is perhaps the most important decision one takes in his life. Today we are spoilt for choices, however, choosing the right home loan can be quite challenging. We need to be extremely cautious while taking a Home loan primarily because we will be building a long term commitment & will take away the majority of our income month on month. Some of the factors we need to consider before taking the plunge are

1) What is the margin money I can afford? 

Higher the better since it will reduce the loan burden considerably & banks will be more willing to lend. However, an important point to consider is that do not borrow from other sources & pay the margin money. This has to come ideally from your own savings.

2) What is the E.M.I I can afford month on month without me having to compromise on my family commitments & lifestyle?

Banks usually lend up to 55% of your Gross income, however, we would suggest this not go beyond 40%. Please get your basics right so that you have enough money to run your family smoothly.

3) Prepare a contingency plan 

In case you do not receive your salary during any period or business does not generate enough cash flows. You cannot afford to miss a single EMI so that your Credit rating stays very good.

 

4) Look into the legality of the property you are intending to purchase.

Ensure no legal Risks are involved in the future, even if the builder/seller tries to convince you. Please do a thorough check

 

5) Look into the resale value & the quality of construction so that you get a fair deal in case you intend to sell in the future.

 

6) Now coming to the loan aspects, do thorough due diligence on the following

 

a) Rate of interest, whether floating or fixed

b) Charges like processing fees, insurance, MODT charges, etc.

c) Any hidden charges

d) Pre-Closure charges

e) Switching charges

f) Balance Charges etc.

 

7) Please look into the customer service reviews of the lender in terms of getting the interest benefits, Tax documents, getting the physical documents, etc.

Get in touch with us expert advice

3) Prepare a contingency plan 

In case you do not receive your salary during any period or business does not generate enough cash flows. You cannot afford to miss a single EMI so that your Credit rating stays very good.

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