A home loan comes as a breather for home aspirants and helps you realize your dream of buying a home. It gives access to a hefty sanction that you can repay conveniently within a lengthy tenor. In turn, lenders charge you a housing loan interest rate that can either be fixed or floating. Though there are many lenders offering home loans, it is your onus to grab the best deal in order to have a good loan servicing experience. Here are 5 things to consider when looking for the best home loan in India.
Lenders fund only up to 75% to 80% of the property’s value, the remaining 25% to 20% is called the down payment that you have to pay on your own. Since the down payment amount can run into several lakh, arranging this may not be an easy feat, especially if you haven’t planned or saved for it. Thus, choose a lender who:
1. Accepts a lower down payment amount
2. Offers proportionate release option, by which you can make the down payment in installments
3. Offers a home loan without a down payment when you have a good credit score and history. In this case, owing to your creditworthiness the lender is likely to sanction you 80% to 90% of your property’s value as a home loan.
Keep in mind that higher the down payment, lower will be your loan amount and EMIs. So, save and invest as much as possible to meet this requirement.
The best home loan for you will be the one that lets you repay the loan via easy EMIs. An EMI is calculated based on your loan amount, interest rate, and tenor. While high-interest rates increase your EMIs, a lengthy tenor also makes your home loan expensive for the simple reason that you have to pay interest for a longer duration.
However, a short tenor may also not be great as it can burden your monthly obligations, which puts you at risk of missing or defaulting on your EMIs. So, in addition to affordable interest rates, find lenders who offer flexible tenors. Use the EMI calculator to arrive at the right tenor, which makes your EMIs cost-effective as well.
Other Hidden Charges
Apart from interest, a home loan also has other charges that add to your overall credit cost. These include processing fees charged to process your application, EMI bounce charges every time your EMI cheque bounces, penal interest for delay or default on your EMI, foreclosure charges for repaying the loan in full before the tenor ends, part-prepayment charges for making partial repayments against principal and others. Your lender may or may not disclose these charges. Make sure to discuss with your lender before signing on the loan agreement.
Easy Repayment Options
Defaulting on a home loan can have serious consequences. Firstly, your credit score will take a severe dip. Next, your lender may take repossession of your home. So, choose a lender that offers favorable repayment terms that help you repay the loan comfortably. Best home loan offers by reputed lenders also allow you to avail the sanction as a Flexi Hybrid Loan. Thanks to this facility, you can borrow as you go and pay interest only on the amount utilised. Moreover, you can also enjoy a four-year buffer where you don’t have to repay anything towards the principal, within which time you can try to increase your earnings and save up to make full EMI payments in the future.
Financial emergencies come unwarranted and can be of a personal or professional nature. In such times, instead of using your credit limit via a credit card, availing a new personal loan or liquidating your investments, you can use a top-up home loan. This is a common sanction that most lenders offer to their existing home loan borrowers. What makes a top-up loan better than most other loans is that it has lower interest rates and can be used for any purpose. So, apply with a lender that offers top-up home loans so that it comes handy in times of need.
Now that you know what the best home loan in India offers, hunt for lenders who offer the same. A reputed NBFC offers high-value Home Loans of up to Rs.3.5 crore at competitive housing loan interest rates that you can pay via a flexible tenor of up to 240 months.