Various lenders offer affordable & comfortable home loans with easy EMI repayment options and flexible interest rates. Thus, finding the best home loan can be a difficult ordeal for both prospective new home owners and seasoned home investors. So let’s look at three important tips that can help you choose the best loan scheme based on actionable advice and accepted principles.
- Think Long Term
A longer repayment tenure can potentially reduce the financial stress while repaying the loan. Besides, any upward trend in interest rates on home loans will further deplete your emergency finances if the loan tenure is short. Apart from a reduced EMI, long term loans also help your chances of securing the loan. The current home loan interest rates are on the rise so consider making advance payments when and if there is a surplus in the future. Notice that in the case of floating rate loans, lenders have been barred from charging prepayment fees, while in the case of fixed-rate loans, RBI may collect or waive this charge.
The extension of the loan tenure to the current loan is regarded as loan modification that may be subject to a rewritten standard.
- Large Down Payments Are Helpful
Current home loan interest rates vary and the RBI guidelines allow loans up to 75% to 90% of the costs of the property. A feature of these guidelines is that the residual amounts shall be deducted from the borrower. Many applicants try to pick a minimum down payment contribution, but the loan applicant is better to opt for a higher down payment.
A higher down payment can result in lower interest rates and EMIs. Higher down payments also improve loan acceptance chances as it reduces the loan’s risk. Yet do not risk your emergency fund or savings for your critical financial objectives while making higher payments. This can cause you to take out loans at higher interest rates for those objectives.
- Evaluate All Options
Take the interest rate, fees, lender’s history, and more, to compare the loan options before undertaking a loan. The interest rate and the related costs will vary based on the credit risk that the lenders deem fit for your profile. Many lenders, for example, offer loans to those with higher loans at lower rates. Many also award their credit rates according to their employment or their employer profile.
The easiest way of comparing interest rates and characteristics is to visit financial marketplaces online with multiple banks and HFCs providing home loans. For example, the PNB housing home loan ‘PNB Housing Finance Housing Loan Interest Rate, the new interest rates for the Nov 2020 loan of PNB Housing Finance Home is set at 7.90% p.a. Up to 30 years for full tenure.
A home loan is an investment that amounts to many years or even decades of repayment. The extensive EMIs and interest rates can leave relatively little space for other funding priorities. But choose a home loan that is affordable, trusted and reliable like the PNB housing home loan.