Buying a house is a huge decision, and hence, it is necessary to pay utmost attention when it comes to the financing options. Moreover, if you decide to take a loan, there are several important things that you must know beforehand, in order to avoid any troubles or technical mistakes later.
Read on to know what are the most significant things that you must know while taking a home loan.
- How Affordable is the EMI?
As this EMI will be a part of your lives for the next 10 to 15 years, you must be completely honest with yourself and must not go beyond your limits. The thought that more earnings in the future will smoothen the repayment can lead you in trouble later, therefore, you must set an affordable EMI, which is not more than 45% of your net monthly income. Hence, clear all the confusions and set an appropriate EMI amount.
- What is the Interest Type?
There are two types of Rate of interest – Fixed and Floating. While Fixed will remain the same for a period of 5 to 10 years or perhaps for the entire tenure of the loan, Floating will keep changing according to the norms of RBI and other fluctuations in the market and can affect your repayment amount. Although you need to choose one, yet, you can switch between them, anytime, though it depends upon the type of Home loan as well, so it is better to check with your agent.
- What are the Charges and Penalties?
There are some fixed expenses such as Processing Fee, Stamp Duty, etc which everyone is aware of, however, there might be some another added charge, therefore, you must ask about this clearly. Further, there is a penalty on default on the payment, with some added interest. Clearly, list down all such charges and penalties before proceeding.
- How to get an Insurance for the Loan?
It is very important to get a loan insurance so that in the case of an unfortunate event, you will still be having a house, as your insurance will pay the pending loan amount. Moreover, some insurance policies even provide assistance in other instances as well such as loss of job, critical illness diagnosis, etc. Hence, it is quite significant to choose the right policy.
- What are the Tax Benefits?
You must be knowing all the tax implications and benefits you are eligible to attain and do not forget to avail such benefits. However, be very clear about the implications and make decisions accordingly.
As taking a home loan would affect a huge portion of your life as well as your wealth, don’t rush into it, consider several options before finalizing, and always ask when in doubt about any concept, to save yourself from future troubles.