A home loan is a financial assistance offered by banks to help people in buying or constructing their house. However, just like any other loan, you need to repay it within due time. Thus, as a borrower, it is important to understand how a home loan can be availed and what enquiries are needed to be made regarding home loan so that you can be better prepared for repaying the loan on time.
Reasons why it is important to enquire about home loan
It takes several years to repay a home loan as the amount is generally huge. Thus, borrowers should enquire about some important aspects of home loan before thinking about availing it. Even after taking a home loan, you may face changes in your financial condition or there might be changes in interest rates, economic conditions, etc., that can make it necessary to make some decisions regarding your existing loan. It is also advisable to keep tracking these changes while you are repaying your home loan.
Enquiries you need to do while taking a home loan
You need to enquire about the following while applying for a home loan.
Before applying for a home loan, you need to learn whether you are eligible for it or not. Different banks set different eligibility criteria. However, all lenders will check your eligibility based on your income level and credit history. They can also check other aspects like your age, financial condition, job security, etc.
Applicable loan amount
It is important to enquire about the maximum amount of home loan that you can avail from your preferred lender before applying for it. Mostly, a loan amount of up to 75 to 90% is advanced as a home loan. In case you include a co-applicant, the lender might offer a higher loan amount considering his income.
There are three types of interest-based home loans. First is the fixed-rate home loan where the loan is offered at a prefixed interest rate. Interest rates in floating rate home loans are directly proportional to changes in the benchmark rate. In the combination home loans, a part of the loan is provided at a fixed rate and the rest at a floating rate. Thus, you need to enquire what type of home loans the lender offers.
It is highly important to decide how long you would take to repay the loan. Thus, enquire about the available loan tenures from your bank to choose a suitable one. The chosen loan tenure will impact your EMI amount. Thus, choose it according to your affordability.
You need to calculate the payable EMI amount. You may enquire the precise EMI that you would need to pay monthly from your lending bank. Shorter loan tenure will fetch higher EMI and vice versa. Knowing about EMI will help you judge whether you can afford the EMI repayment or not.
You need to check which documents you would be required to produce or submit while applying for a home loan. The document requirements may vary from one lender to another. The commonly required documents are voter ID, PAN card, Aadhaar card, bank statement, employee ID, property papers, etc.
Enquires you should do after availing a home loan
The enquiries that you need to make when you have a home loan are given below.
You may want to transfer your home loan to another lender for availing a lower interest rate on your loan or better services. Thus, you need to enquire what is the procedure and requirements for a balance transfer.
If you want to reduce the EMI burden or the loan tenure, you can make lump sum part payment of the home loan. You may also foreclose the loan by paying the entire amount of outstanding loan. For that, you need to know the required procedure from the lending bank for foreclosing your account and check if they charge any foreclosure fees or not.
Top-up loan facility
It is important to enquire about your home loan to check the maximum amount of top-up that you avail from the loan. You can request for a top-up loan up to the originally sanctioned amount of your home loan. As it is a personal loan, the interest rate is likely to be high, which you should check before applying for the top-up. Usually, banks ask to submit documents like existing loan papers, KYC documents, employment proof, etc. and pay a processing fee while applying for the top-up loan.
Enquiring and knowing about all these aspects before taking and while having a home loan is necessary for making well-informed decisions while managing your finances for getting your dream home.