Top 5 Things to Consider While Looking for a Home Loan

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posted on 7 years ago — updated on 1 second ago

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Buying home is no more a once-in-a-lifetime decision. With the rise in income of working middle class and easy availability of home loans, one can think of buying her first home in twenties or thirties itself.

New Delhi: Buying home is no more a once-in-a-lifetime decision. With the rise in income of working middle class and easy availability of home loans, one can think of buying her first home in twenties or thirties itself. One has to stay informed with the ever increasing and fluctuating real estate prices. However, the most important part of buying a home is getting the right home loan.

Different banks and financial institutions offer home loans at different interest rates but only interest rates should not be your sole criteria for choosing your lending institution. Let us check top 5 things to keep in mind while taking a home loan:

Lender with Daily Reducing Balance

Ensure you opt for a lending institution offering daily reducing balance rather than monthly. Daily Rest Method is the cheaper than annual and monthly rest method. It can help you save lakhs in the long run.

Checkout for Reviews

Before going for a home loan check out for reviews of different banks, if you don't find helpful reviews online then take feedback and opinion from close friends. Look for those who might have taken a home loan from different banks and seek reviews about the interest rates and repayment. This will certainly help in listing the best loan institution for your home loan.

Learn about Floating and Fixed Rates

There are two types of interest rates—Floating and Fixed. Floating interest is linked with the market and moves with the base rate. Fixed rate, on the other hand, stays fixed as per the loan agreement. Given the current scenario of economy, floating interest rates is a good option.

Get Your CIBIL Score Right

A good CIBIL score of about 750 or more helps in easy approval and disbursal of your home loan. CIBIL score reflects your credit worthiness and banks refer to this while processing your home loan application.

Understand the Foreclosure Norms

The Reserve Bank of India (RBI) has foreclosure penalties, so make sure you don't end up paying extra while foreclosing your loan. Go for a lender who doesn’t ask for pre-payment penalties after a certain initial-lock-time period of your home loan.