Home loan is required when you decide to buy your dream home and for that down payment is required too. Whether you are a salaried person or self-employed, you will not be able to pay the full amount in one go.
Before borrowing money from any financial institute you are required to go through all the legal formalities and clear up your questions with the lender as well. Here are some important questions that you need to ask the lender before taking up the loan:
- Amount of Money
If your credit score is good and your ability to pay the cash is smooth throughout the year then you will easily get the loan from the lender. You need to ask yourself how much money is required and for what reason you are taking the loan. Home loans should not have any hidden charges and the amount that you are thinking of borrowing should be limited to your own need. Add up all anticipated charges and hidden costs, stamp duty to get the exact amount of your monthly EMIs before borrowing the money from the lender.
- Documents Required
You should be aware of all the documents required while applying for home loan finance. For applying for a loan, you need a good credit score and your 6 months salary slips or financial statements. You are also required to submit your identity proofs and address proof to make loan sanction easy.
- Know Your Credit Score
Your credit score is very important as it decides your loan sanction and amount as well. If your credit history of repayment of credit card bills and other loans is good then there is no problem faced in getting a loan. It is a three digit number that gives a preview of your financial situation to the banks and financial institutes.
- Can Your Afford The EMI?
Before applying for a home loan, always access the EMI amount that you are required to pay every month. Banks normally caps the EMI at the 45% of your gross monthly salary. If you are already paying the amount for some ongoing loan then there might be chances that banks may lower the EMI upto 30% of your income.
- How To Calculate Interest Rate?
Almost all the banks provide the same interest rate levied on the loan amount. But, their computation process is different so some might calculate interest on monthly rate while some might calculate principal on which the interest is charged reduces every month.
- Check Your Home Loan Agreement Copy
Before signing any agreement copy given by the bank, you must read every point thoroughly so that there is no discrepancy afterwards. Understand loan terms and agreements in a better way. If there is even a single doubt on any point then get it cleared with the bank before you finally sign up the copy of agreement and hand it over to the bank.
- Term Of The Loan
Consider the term of loan and see whether it works out for you or not. Go for a shorter timeline if you have a bigger amount to pay on a monthly basis. Go for a longer repayment period if you want to pay smaller and affordable payments.
- Requirement Of A Cosigner
Some banks or lenders may allow a cosigner on a loan that helps an applicant in getting loan approval easily. If something happens to you and you are unable to pay the loan then the cosigner is held responsible for paying back the pending amount. In this case, both borrower and cosigner are equally responsible for paying back the loan amount.
- Deposit Amount
This amount is assessed by the lender depending on the amount they are lending and value of the property. If the lender is willing to lend over 90% of the purchase price then you need to deposit as less as 10% of the purchase price. Get the estimate on all the costs so you know how much amount will be covered by your savings.