LoanBoss Blog

Sustaining a Home Loan

06 Jun, 2012 By:admin in Home Loan,

 

Having a home is a cherished dream of an average Indian. Due to the skyrocketing prices of property, many people have held themselves back from buying their dream homes. But courtesy of home loans, this far-fetched dream has turned into a close reality for many. Whether purchasing an already-built house or constructing it from the ground up, finalizing on one takes plenty of time and effort. Additionally, deciding on the home loan is one of the most crucial aspects of buying a home. Thereby, one must be considerate of several important factors when making the decision.    
Type of Property :
An Indian citizen (resident or NRI) considering a purchase of a property is entitled to apply for home loans to an accredited financial entity in India. Before applying for the loan, one must consider the kind of property he is looking forward to buy. Lenders offer home loans for three different kinds of property:
ready to move in home
construction on a pre-owned plot
under construction house from a third party
Repayment Options :
Once one has decided on the property type, he must research on the loan repayment options provided by various banks. Factoring in different aspects like property prices, borrower's income, his previous repayment records, etc., the lending financial institution decides on the loan amount and repayment structure. 
Several institutions allow borrowers to switch from floating rate home loan to fixed rate home loan. Adding to that, a no-penalty option is also on offer by a few financial institutions wherein one has the option of prepaying up to 25% of his loan each year. These options can make repayments extremely convenient for the borrower. Therefore, it's of utmost importance that the borrower does his homework on differing options on offer by various lenders. 
Loan Period : 
All kinds of loans available in the market are offered for different time periods. A person can opt to repay the loan within five years or take up to as much as 25 years. One should keep in mind two aspects here:
the longer the loan period, the more interest to be paid
the longer the loan period, the more tax benefits  
Aggregate interest and tax benefits are the two main concerns for the borrower and he must give a deep thought to his repayment capacity, higher interest rates and longer repayment period, prior to making a decision. One can take help of friends and family members to aid in making a balanced decision so that he doesn't end up losing a fortune over repayments. 
Co-applicants :
Due to the high property prices, chances of getting a loan passed for the required amount are less. Therefore, several banks let loan co-applicants combine their incomes in order to increase the loan amount. The repayment installment amount is divided between both the applicants which makes it convenient. Pretty much all the lenders allow co-applicants to apply for home loans, but the definition of co-applicants differ from one lender to another – spouse, parents, siblings and children come in the category. 

Having a home is a cherished dream of an average Indian. Due to the skyrocketing prices of property, many people have held themselves back from buying their dream homes. But courtesy of home loans, this far-fetched dream has turned into a close reality for many. Whether purchasing an already-built house or constructing it from the ground up, finalizing on one takes plenty of time and effort. Additionally, deciding on the home loan is one of the most crucial aspects of buying a home. Thereby, one must be considerate of several important factors when making the decision.    

Type of Property :

An Indian citizen (resident or NRI) considering a purchase of a property is entitled to apply for home loans to an accredited financial entity in India. Before applying for the loan, one must consider the kind of property he is looking forward to buy. Lenders offer home loans for three different kinds of property:

ready to move in home

construction on a pre-owned plot

under construction house from a third party

Repayment Options :

Once one has decided on the property type, he must research on the loan repayment options provided by various banks. Factoring in different aspects like property prices, borrower's income, his previous repayment records, etc., the lending financial institution decides on the loan amount and repayment structure. 

Several institutions allow borrowers to switch from floating rate home loan to fixed rate home loan. Adding to that, a no-penalty option is also on offer by a few financial institutions wherein one has the option of prepaying up to 25% of his loan each year. These options can make repayments extremely convenient for the borrower. Therefore, it's of utmost importance that the borrower does his homework on differing options on offer by various lenders. 

Loan Period : 

All kinds of loans available in the market are offered for different time periods. A person can opt to repay the loan within five years or take up to as much as 25 years. One should keep in mind two aspects here:

the longer the loan period, the more interest to be paid

the longer the loan period, the more tax benefits  

Aggregate interest and tax benefits are the two main concerns for the borrower and he must give a deep thought to his repayment capacity, higher interest rates and longer repayment period, prior to making a decision. One can take help of friends and family members to aid in making a balanced decision so that he doesn't end up losing a fortune over repayments. 

Co-applicants :

Due to the high property prices, chances of getting a loan passed for the required amount are less. Therefore, several banks let loan co-applicants combine their incomes in order to increase the loan amount. The repayment installment amount is divided between both the applicants which makes it convenient. Pretty much all the lenders allow co-applicants to apply for home loans, but the definition of co-applicants differ from one lender to another – spouse, parents, siblings and children come in the category. 

 

Comment:(1)
on 27 Oct, 2016

Short, sweet, to the point, FRcxEe-aEtly as information should be!

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