Home Loan Tips for Professionals buying a Home for the first time
A home is more than just an assembly of bricks and concrete. Buying a home for the first time is a special feeling – it gives you a sense of stability in your life. For some people, it is a symbol of having ‘arrived’.
If you’re on your way to make your first home purchase, take a look at these tips for a smooth and successful experience.
Get familiar with home loan eligibility
If you are new to the home loan procedure, get started with understanding the basics. Many borrowers find themselves in a fix when they come across the fact that they are not eligible for a loan. Knowing your eligibility for a housing loan beforehand will save you from last-minute surprises.
Plan an affordable amount of loan
In financial matters, biting off more than you can chew is not a smart choice. Filter out options that fall outside your budget so that you can manage your present as well as future finances with ease. You might find yourself lost in a debt jungle if you end up paying 80-90% of your salary as EMI for a loan. Ideally, the entire loan’s EMI should fall under 50% of your monthly income. To get precise numbers for various aspects including the amount, an online home loan EMI calculator might come in handy.
Maximise the down-payment amount
Even though most lenders provide for a maximum of 85% of the property value, it is wise to accumulate the amount for the down payment. This will ensure the interest cost is lower by the time the tenure of the loan ends. Moreover, maximising your down payment will also lower the loan amount which in turn will lower the cost of the home loan EMI.
Do not choose a long tenure
A long tenure for your home loan may drop the cost of EMIs but this will result in a massive interest repayment load. Therefore, you choose a relatively shorter tenure and also maintain an EMI cost that is affordable for you. This will ensure a burden-free, smooth, and balanced loan repayment.
Choose competitive interest rates
Another thing to keep an eye on is home loan interest rates. A home buyer needs to choose a lender that offers the best rate. You should carefully compare home loans from all the leading banks and NBFCs and the rates they’re offering. Also keep yourself updated on seasonal offers that lenders roll out.
Fixed or Floating: Which one to choose?
It depends on the dynamic condition of the market trends as well as your monetary situation whether you should opt for a fixed or a floating rate loan. Loanees should go for a fixed-rate loan since it assures a stable repayment process in the future. However, if the rates are high, it is wise to opt for the latter since you will be able to get the benefits of a lower rate in case the market dips.