5 elements to look for in a home loan

We present five loan features to understand and look out for when you apply for the housing loan.

Are you about to take a home loan for the first time? You must have many questions about the process and what to expect. Allow us to simplify the concept of the home loan by presenting the following five features of a home loan:

1. Loan eligibility. Start by finding your home loan eligibility. This is the amount of money that your bank will give you as the loan amount, based on certain factors: income, age, number of working years left, credit history, place of work, etc. When you input these figures in a home loan eligibility calculator, you get the loan amount that the bank will offer you. Knowing your eligibility helps you rejig your own finances, and also shortlist the properties that fit your budget.
2. Interest being charged. The bank housing loan is offered at a certain rate of interest. Post-demonetisation, banks lowered the lending rate on housing loans. Thus, bank housing loans are now offered at rate of 8.65% to 9% across major banks in the country. Examine the interest rates across different banks before making your choice. 
3. Type of interest being offered. The bank housing loan will be offered at either a fixed rate of interest, or a floating rate of interest. Under a fixed rate of interest, you will continue paying the same amount of EMI throughout the tenure of the loan. As opposed to this, you will pay the interest on the reducing principal as the loan is being repaid over the years. Most people opt for the floating rate of interest because it results in lower total repayment to the bank. 
4. The evaluation process. After you apply for the home loan, the bank examines your credentials, the property you wish to purchase and also the property document. This process may take a while to complete, since the checking is done on-site by legal and construction experts. If you are in a hurry to close a deal on a house, it is better to apply for the loan as soon as possible so that you can get the funds disbursed quickly. Premier banking institutions conduct these checks quickly so that customers are not hassled by delays.
5. Processing fees.These are fees that are paid towards getting the final disbursal. The fees include application processing fees, legal evaluation fees, stamp duty and registration charges (after paying at least 20% of the property’s price), pre-EMI cheque, etc. Get the entire spectrum of fees and charges and add them up before you apply for the bank housing loan.If you have a relationship with your bank, you can get some of the charges waived off.