Blog Summary: Are you planning to buy your first home and confused about how to avail a home loan? Well, here is a guide to choosing your home loan, which will help you move about the process without hassles.
Getting a home is a pleasant feeling, but there is a lot of work involved in it. One of the major entities you need to be mindful of in getting a home is the home loans you avail of.
Choosing the right home loan is an important decision. But it’s not as simple as it sounds. To get a loan sanctioned, you need to meet certain criteria. For example, you need to choose the right loan type with appropriate interest rates. If not used to this, you may end up having to pay more into your loan. That’s why it’s essential to know; how to choose a home loan and what factors you need to consider?
What are the things that you need to do before getting a loan?
Check for your home loan eligibility
Different criteria come into play when availing of a loan. For example, the income of the loan taker is taken into consideration, and the net monthly income needs to be higher than 10,000 for availing of a home loan. In addition, the home loan eligibility also largely depends on other factors like age factors and CIBIL credit score.
A fair credit score
A credit score is the game-changer in availing of a home loan. A good credit score is the most primary and indispensable factor while seeing home loan eligibility. Having a CIBIL score of more than 720 is ideal, and this gives a much better chance of availing of home loans in Chennai. On the other hand, a CIBIL score below 640 is considered poor, and it needs to be worked on to avail of a loan.
Chennai and home loans
Chennai is a well-developed metro city that is continuing to grow at an exponential rate. A comfortable lifestyle coupled with an optimal cost of living is the reason many readily sought Chennai to buy a home. Moreover, home loans in Chennai come with a minimal down payment and fine interest rate options. This is another reason people actively seek out homes and home loans in Chennai. Few notable banks offering home loans in Chennai are HDFC Ltd. Bank, ICICI Bank, Indiabulls Housing Finance, LIC Housing Finance Limited, Canara Bank, Axis Bank, State Bank of India, Aditya Birla Capital, and much more.
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Set your documents
The main entity checking for your home loan eligibility is looking if you have all the necessary documents intact. You will need documents like your identity proof, address proof, registered agreement, basic housing documents, approved plan copy of the housing, income certificate, bank statement stating good flow of money, and much more.
Research on the loan options
Read up on the loan options available and decide on which will suit you best. There are plenty of home loan options to choose from, and you need to know the loans that suit you the best depending on the kind of home loan in Chennai you want.
Home Buying loan
This home purchase loan is the type of loan the buyer pays for the entire built home. If the borrower has good credit, then the chances of getting a loan can even increase up to 90%. There is the involvement of down payment and interest rates that you need to take care of.
Home renovation loan
Home renovation loans are budget loans sanctioned for repairing and building houses. This loan comes in handy when you already own a house and are looking for adding up an extra room, floor or carry out any other home altering that they want.
Home construction loans
Home construction loans are loans sanctioned for home construction that happens from scratch. The average amount for home loans in Chennai for home construction depends on the approximate construction amount that the borrower proposes. Home construction loans are in general availed in installments throughout the home construction process.
NRI home loans
Non-residential Indians loans are the loans that the NRIs can avail themselves of. This can be availed for home buying, construction, and home maintenance. The home loan eligibility for NRIs is higher because of the high salary package. To avail of an NRI home loan in Chennai, the borrower should have worked overseas at least for 6 months.
Pradhan Mantri Awas Yojana (PMAY)
The government is aiming to provide housing to all by 2022. The Pradhan Mantri Awas Yojana scheme sanctioned by the government provides loans for people’s middle and lower socio-economic classes. However, the home loan eligibility for availing this loan depends on the economic status in most cases.
This scheme helps save up a lot and also provides subsidized interest rates. This scheme also provides extended home loan tenure of up to 20 years.
The loan payment cannot exceed 80-90% of the market value of the property. So you need to get the down payment ready to pay the initial amount for getting the property.
According to the RBI, with regards to home loans in Chennai, India, borrowers can take a loan only up to 90% of the total value of the property, and the rest 10-20% needs to be paid off on their own, which will come off as down payment. Therefore, plan your down payment and finances accordingly so that you can sort out your EMI payment without any hassles.
Choose the right EMI (Equated monthly installment) module
EMI is the fixed amount paid back to the lender /bank to complete the loan payment tenure. Choosing the right equated monthly installments (EMI) module is necessary as it will facilitate your repayment tenure without hassles.
Rate of interests
The rate of interest is paid along with a fixed principal amount borrowed. There are two types of rates of interest, and you can choose the one which suits you.
The interest rate added to the principal amount to form the EMI remains the same throughout the repayment tenure. This is fixed by analyzing the property value and market trends, and after which an average interest rate is set.
The floating interest rate change as per the market trends. This is not consistent and differs from time to time. While availing a floating rate interest, the EMI that the borrower pays back changes from time to time according to the change in the interest rate and market rate.
Have a proper repayment plan
Getting home should not leave you broke till you finish paying all the EMI and Prepare a repayment plan accordingly, which will help you repay the EMI with interests without any hassles involved.
Be aware of additional charges.
There are other charges like processing fees, service charges, and administrative charges involved. These are charges other than EMI. You need to be aware of these charges and get a clear understanding of the charges you will be levied upon, and know if there are one-time charges or equated monthly payments.
Key Take-Away :-
The above was a short guide on availing of home loans in Chennai, and I hope it gave you clarity on home loan eligibility and other entities like types of loans, EMIs, and interests rates involved. For availing of home loans in Chennai, getting the houses from renowned builders like Fomra hues can easily increase your chances of getting the home loan sanctioned. If you have any queries, please feel free to reach out to us or comment below.