A dream home that meets one's expectations can bring great joy! The rising cost for building homes has made it impossible for the common man to afford this joy! This is where home loans can be used as an effective financial tool to fund the requirements. Owing to stringent banking norms loans have become less accessible. However, with customers becoming more aware of aspects like a credit profile, ensuring submission of the right documentation and so on has made applying for loans a smoother process!
So what does one have to know about home loans anyway? To put it in simple words, home loans are all about the cost, i.e. interest charged and the repayment policies that are set by the bank or any other financial institution. It comes with different interest rates and is provided to the customers to suit their requirements.
Some of the common home loan variants include the following:
Fixed interest rate
If you are weary of the fluctuating market conditions, these home loans are probably the best. However, they come at a cost because of their fixed nature throughout the loan tenure.
They are usually priced above the normal market price and provide maximum protection from fluctuations. The change in the market rates will not affect the EMI (Equated Monthly Instalment) for each month. This way, the customer can plan his finances more efficiently.
Floating interest rate
These loans can be a comparatively risky option for borrowers. However, if the market conditions turn favourable, the customer is sure to gain from it. The EMI (Equated Monthly Instalment) that is repayable will come down as and when the floating rates are reduced. Hence they can provide a relief for the customer during the repayment period, if interest rates in the market start to fall!
Home loans should be taken after considering several factors such as interest rates, the repayment tenure and the maximum loan amount one is eligible for! Keeping in mind the financial requirements that are needed, it is important for a customer to approach different banks to evaluate the options available. Loan providers may require the customer to furnish collateral and other important documents in order to speed up the loan sanctioning process.
It can also be utilised to remodel an existing home. Bank websites and loan officers can provide assistance in helping an individual understand the options available. Exercising caution in selecting a suitable loan scheme is important to avoid any financial hassles in the future. With thorough research on the best available loan schemes, customers can arrive at the right decision!