Credit Wisdom

One such major dream today is that of having your own house - a space you can call your own house and eventually make it into a home where you share and cherish memories of a lifetime. And what better than some help in the form of a home loan to turn your dream house into a reality.

Most banks calculate eligibility for home loans based on the borrower’s age, their retirement age (60 in case of government services and 65 in case of private), their monthly income, monthly expense obligations, etc. While all of these screening factors may seem scary and daunting, it usually works out in the borrower’s favor since they know exactly what they’re getting into.

Most home loans in India offer to cover up to 80% of the cost of your property in the loan amount and if the property costs less than INR 20 lacs, the loan amount granted can go up to 90%, if required. You also have the option of choosing the loan tenure of either 10 or 20 years. However, again, there are banks that will give you a tenure of 25 or even 30 years – it’s all about research and making an informed decision on the borrower’s part.

Yes, loans and interest rates and financial jargon can get too much to handle. Often people make decisions in haste, despite knowing there is money involved, simply because sales people bombard you with so much information that you don’t know how to use it to your benefit.

So, begin with the basic and when seeking a loan, ask the bank what will be the net amount that you will be paying at the end of your loan tenure (whether 10 or 20 or 30 years). The net amount paid is the total sum including the principle borrowed, the interest, processing fee, administration fee, etc. Knowing this amount gives you a good perspective to choose a better loan service provider than just making decisions based on interest rates.

When it comes to home loans, banks differ from each other in providing floating or fixed interest rates for home loans. Fixed interest rate, as the name suggests means a fixed rate of interest will be applicable all through your term (whether interest rates in the market increase or decrease, it will have no effect on your rate of interest) while when it comes to floating rate of interest, the interest rate will change depending on external factors, on a yearly basis.

Before choosing your interest type, evaluates your options and think about the risk you’re willing to take. As intimidating as the loan choosing procedure may be, the happiness that arises from buying your own house is definitely unmatched! As for the loan choosing procedure, there’s always us at Credit Nation for you to bank on and help guide you through all your important decisions.