Things to consider before taking Home Loan - Home Loan Blog - Tata Capital

Home Loan options in India

Mar 08, 2017

Buying a house is the biggest financial decision for most people. But due to sky-high property prices these days, most people end up availing housing finance to realize their dreams of owning their house.

Home Loan Options in India

Banks are more than willing to give money to potential home buyers. Retail property loans are one of the safest bets for banks too. So when most lenders are looking to give you money to help you buy a house, it's best to become selective and objectively analyse the available loan options to secure the best deal. A potential home buyer needs to do his homework rigorously. Important criteria's like interest rates, floating/fixed, prepayment options, etc. need to be properly evaluated with regards to individual's unique requirements and circumstances.

The most important factor is the rate of interest at which the home loan is being offered. Lower it is, better it is for the buyer. There are many schemes that offer floating rates with lower rates in initial years. In reality, these schemes make up for the lost money in later part of the tenure by hiking the applicable rates. The important thing to analyse here is the total interest outflow over the life of the loan should be lowest among all available options.

Now you might want to purchase a house worth Rs 50 lacs. A bank might only be willing to fund 80% of that amount, i.e. Rs 40 lacs. This means that you need to arrange remaining 20% (Rs 10 lacs) from your own pocket. But if you only have say Rs 7.5 lacs with you, you need to find a bank that offers atleast 85% of the total amount (i.e. Rs 42.5 lacs). So do enquire about the down-payment, which banks want you to put in for availing the loan.

Also, higher the loan amount, higher will be your EMIs. So make sure you only take a loan whose EMIs you can comfortably service. Its possible that in future, you might want to pre-close your loan. So do make note of prepayment charges and other such details to avoid negative surprises in future.

Factors like time involved in loan application, documentation, processing charges, service speed, etc. are of importance too. But not as important as saving a few lacs over the tenure of loan, by opting for a loan with lower interest rate. So when you do apply for housing finance, remember that your priority is to get the best possible deal in terms of lowest interest rates, highest tenure, etc.