In today’s time, a beautiful house is everyone’s dream and every individual wants to live happily in it with his family, but nowadays buying or constructing a new house is not an easy job. Both buying and constructing a house requires a huge amount of expenditure, which is not easy to gather at once. But, these days home loans facilities are available which make necessary funds available to an individual, so that he can make his dream house. Home loan is a kind of legal agreement where a borrower promises to pay all the installments with interest rate, and if the borrower fails to pay his/her installments; the bank has the right to acquire his/her property, described in the mortgage deed. The installments are easy to pay as small amount has to be paid in a long period of time.
Thus, there are lots of advantages of taking a home loan, but risks are also associated with it. Below are some important tips, which will help you in understanding the concept of taking a home loan;
Amount of loan: - If you want to apply for a home loan; firstly you have to identify the loan amount required by you. You need to determine your sources of income and calculate your expenses. The home loan must be taken to the extent, which you can easily pay-off in monthly installments.
Know interest Rate: - Before applying a home loan, it is important to know the rate of interest.Home loans are based on two types of interest rates viz. fixed and floating. The fixed rate of interest doesn’t change with the market variations, however floating interest rates vary according to the market fluctuations. Many banks and financial institutes provide home loans with various schemes and all of these institution charges interest according to their policies. Normally, the rate of interest depends upon the loan amount and installment paying term. So, if you are thinking of buying or constructing a house then you must know about interest rates and interest types.
Security: - A bank always provides loan with some kind of security and this security is called mortgage. For instance, if you want to get home loan of Rs 20 lakh; you have to mortgage a piece of land or any asset, which has market value equal to Rs 20 Lakh. The mortgage process is lengthy and requires proper documentation. For better assistance, you can hire an advocate having good experience in mortgage.
Fees and charges: - Banks generally charges a fixed amount of fees to their customers. Before taking a home loan, you must know about all the fees and extra charges, like: application fee, additional repayment fee, mortgage discharge fee, redraw fee, switching fee, and late payment fee.
Prepayment Charges: - Prepayment means, paying the loan back in single installment. Many banks do not charge any amount for the prepayment. Ask your lender about prepayment charges, as many banks do not reveal the information about the prepayment of the loan.
There are numerous banks providing home loan, personal loan and vehicle loan. If you are interested in taking a loan, then check the details of banks along with their addresses and contact details on Grotal.com.