Whenever you think of buying a house, the source that would finance it is important. So it is important for you make sure that the home loan you are taking is affordable for you and that you would be comfortable enough to repay it. In case you are not able pay them back it might lead to bad credit history.
There are a few factors you should remember before getting a home loan:
It is not advisable and also not wise to borrow huge sum of money or apply for different loans at the same time as a huge debt will make your repayment difficult which would lead to a debt trap. Your loan amount should depend considering your monthly income,how stable is your job, age, other liabilities and financial commitments. Whenever you apply for a loan, the borrowers are required to give down payment or margin money which may be 8% to 20% of the loan amount.
Tenure of repayment of loan:
Borrowers like to pay off their loan or debts as soon as they can and choose short tenure loans. When the loan tenure is for short period, the monthly EMI becomes very high. Longer tenure is should be chosen to enhance the eligibility of loan of the borrower but a longer tenure increase the cost of borrowing. A person close to his retirement will not be eligible for longer tenure of the loan. If the EMI for short term loan is not affordable and you want to pay off your loan quickly, you can take a middle path for the period of 10 to 15 years.
Hybrid Loans
whenyou consider buying a home loan it is important to consider the rate of interest. Either you can consider a fixed rate or floating rate of interest. The fixed rate of interest remains fixed for the entire tenure of the loan irrespective of change in the interest. Floating rate of interest is chosen by borrowers who expect the interest rates to fall in future and want to benefit from it. Hybrid loan is a combination of fixed and floating rate of loans. The borrower can lock a portion of loan under fixed and leave the remaining under floating rate of interest.
Insurance of Home Loans
Insurance for Home Loans enables you to insure the loan and repay it in cases of an accident, or death, sickness or a loss of job. If the home loan is insured and in future if you are unable to repay it due to reasons stated, your insurance company would payoff your loan and avoid the burden of home loan.
Tax Benefit
If you take home loan from a recognized lender such as a bank, you can get tax benefit on your principal loan amount and interest paid along with your monthly EMI.
Though Home Loans are given by almost every bank in the country, but our point of focus is restricted to HDFC Ltd.:
HDFC Ltd. Home Loan
Maximum Amount of Loan
Maximum loan given is 80% of the cost of the property which includes the cost of the land and based on the repayment capacity of the customer.
Maximum Tenure
The maximum term for the repayment of loan shall be upto 30 years which is under the Adjustable Rate Home Loan scheme.
The maximum tenureof loan shall be upto 20 years which is under the Fixed Rate Home Loan plan.
Repayment will not normally extend beyond a person's age of retirement if he is employed or reaching 70 years of age, whichever is earlier.
Applicant and Co-applicant
Home Loans can be applied either individually or jointly. The proposed owners of the property, will be the co-applicants. However, the co-applicants need not be the co-owners.
Loan which is under the Adjustable Rate is linked to HDFC's Retail Prime Lending Rate (RPLR). The rate on the loan will be revised every three months from the date of first disbursement, if there is any change in the RPLR, the rate of interest on the loan may change. The EMI on the home loan disbursed will not change. When the interest rate increases, the interest component in an EMI will also increase and the principal component will reduce which would result in an extension of term of the loan, and vice versa when the rate of interest decreases.
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