Factors to consider before finalizing your home loan

Who doesn’t want to acquire the keys of their dream house? Well, many of us do so and the most common hurdle we come across in this, is money. This is where home loans come to our rescue, making it possible to think about and own a house. Buying a home, does not simply mean that you have a house in your name, it is also a very good investment for the future. Banks and other financial institutes give loans to people after considering certain aspects, in varied rates of interest. You must consider various things, before you think about taking a home loan.


Getting home loan is comparatively easy part; the tough part is choosing a loan and interest rate. Some of the things you must consider while selecting a loan and interest rate are given here:

• Think about how much you can afford. Your ability to repay the loan will largely depend on your income. For most of the home loans taken, one will have to repay a monthly repayment 30-35% of their gross salary.
• Decide about the amount of loan money you would like to take as loan. Generally, financial institutes and banks give home loans on 80-85% of the value of the property.
• Take a decision about the tenure of the loan. Normally, banks will give you a maximum repayment period of 15 years. In some cases this can be extended to 20 years; longer the tenure of the loan is, smaller is the monthly installment.
• Choosing the type of interest rate is vital. The most commonly preferred two types of interest are fixed rate and floating rate; hybrid rate (combination of fixed and floating rate) is also another concept opted by some people.
• Understand properly the amount of EMI you will have to pay for the loan. Compare the rates given by various companies; even a small difference of 0.5% would make a huge difference to your overall repayment amount of the loan.
• Be clear about each and every aspect of the home loan, before you sign on the dotted lines. Once you have signed, it will be pretty tough to change any of the schemes and options you have selected and may not like later on.