If you go by interest rates on home loans as indicators, this is definitely the ideal time to become a homeowner in India. With record lows of less than 7%, other factors such as tax benefits on the interest you pay, the effective cost of home loan in the higher tax slabs will be less than 5%.
Opting for a home loan is a long-term commitment of 15-20, and at times, even 30 years when it comes to finance. Any misstep will lead you to loss of money and your peace of mind. Hence, plan out your home loan before you decide to contact an apartment builder in Chennai or look for villas in Mogappair Chennai. You need to choose the right lender and search for the best loan option that meets all your needs and wants.
So we have prepared a checklist to get a home loan easily-
What are some things to consider before choosing a home loan?
The first step before considering a home loan would be to understand various aspects of it. Here are a few important variables you can focus on!
Interest rates
Whenever you pay EMIs, remember that interests are factored into it along with the principal amount you borrowed. The amount of interest charged is on the basis of reducing balance which implies the principal amount that is outstanding comes down as you pay your EMIs.
Presently, interest rates on home loans are at the lowest as they have been in the past fifteen years (6.65% per annum). Female borrowers are offered a discount of 0.05% rate of interest. So opting for a joint home loan with a co-borrower as a woman makes sense.
As per the interest rates stated above, here is a comprehensive list of various EMIs over a range of different tenures-
| Tenure of Home Loan | EMI paid for every INR 10 lakh | EMI paid for women (in INR) |
|
10 years |
11,431 | 11,406 |
|
15 years |
8,794 |
8,766 |
| 20 years |
7,544 |
7,515 |
| 25 years | 6,846 |
6,815 |
Maximum loan amount
Whether your bank will finance your choice of apartment for sale in Ayanambakkam or you need to contact apartment builders in Chennai for more affordable options will depend on two major factors-
- Value of property
- Your income level
Banks and lenders mostly finance 70 to 85% of the total value of a property. Some lenders may also agree to cover 80%.
Your repayment capacity also determines the loan amount that can be sanctioned by the bank. Whenever you apply for a loan, a bank will access your current cash inflow and consider all your existing liabilities which will reveal how much you will be able to repay on a monthly basis.
Most financial advisors suggest restricting home loan EMIs to 40% of the total incomes in a household.
What are the steps involved in choosing a home loan?
Whenever you apply for a home loan, there are certain choices that you need to make as stated below-
Fixed or floating rate of interest
Due to low-interest rates, many homeowners are opting for luxury apartments marketed by apartment builders in Chennai. When it comes to choosing between fixed and floating rates of interest, choosing the former option is definitely the smartest decision as further cuts in interest rates are highly unlikely. So locking your interest rates for the next 15 to 20 years would prove to be advantageous.
Choose optimal loan tenure
Just like choosing an ideal lender is important, choosing the correct tenure for your home loan is equally important. Remember that a longer tenure for your home loan will be easier on your pocket as the EMIs will be less, but you will be charged with a high-interest rate. Again, short tenures would mean higher EMIs which might remain unaffordable to many homebuyers.
Get an insurance cover
Let’s make something very clear- all lenders take interest in assets and hence you must seek property insurance. With a premium amount of INR 2000, you can provide protection to your INR 50 lakh home in case an unexpected fire breaks out or it gets damaged by unforeseen natural calamities such as earthquakes and floods. While these policies mostly cover the structure but depending on the terms and conditions of the insurance, the insurance cover can be extended.
Look for external benchmarks
Borrowers in India have longed for a reduction of home loan rates which was absent although interest rates were lowered. Hence, to answer their pleas, the RBI recently mandated the external benchmarking of loans.
So it is always advisable to choose a bank that has opted for the repo rate to be its external benchmark. It will provide you with stability and is driven by the regulator which is to work in favour of the borrower.
Conclusion
Look beyond your financial aspects
Apart from the above-stated factors, there is more to choosing a lender for your home loan. An ideal lender should provide customers with excellent post-disbursal service and they must respond to all kinds of requirements of the customers.
Once you get the loan amount approved by a bank or any other money lending institution, remember that you need to interact with the lender on multiple occasions. For example, when there is a change in the interest rate, some lenders ensure to proactively inform all their borrowers about the change. They also offer proper guidance to make the process of transition easier. Other lenders let their borrowers decipher the change in the rate of interest on their own.
Moreover, accessibility is another key factor that every borrower must look for when choosing a lender.
