Essentials before you take a home loan!

By | April 16, 2014
Home loan essentials

Applying for a home loan

Rohit had always dreamt of having a lavish home where he could live with his large family. He believed that his dream was a far fetched one until he came across the option of home loans. By taking a suitable home loan, he was not only able to buy his dream house but he also ended up saving some money for the future. The process of applying for such a loan is usually a time consuming one when you don’t really know what to look for in a lender. To put it simply, every borrower needs to spend some time in research so that a proper loan can be acquired. Various prominent banks like ICICI and SBI are coming up with exclusive home loan deals for customers. With a little bit of attentiveness and smartness, anyone can strike an affordable house loan deal.

Real estate developers in India are working hard for making the dream of their customers come true as far as building lavish houses are concerned. One of the major reasons why people are switching towards the method of loans is that they help in saving taxes on many fronts.


Knowing the Loan Eligibility

Every financial institution which deals in home loans has a specified set of requirements which are to be met by a borrower. When a borrower is found to be eligible for the loan, only then he is granted the amount applied for. Usually, the loan amount which is to be sanctioned by the banking institution depends largely on your previous record of repaying heavy amounts. Your credit card details are also taken into consideration before granting the loan. As a borrower, you must know about your house loan eligibility so that you could get your application processed.


Checking the CIBIL Score

A borrower needs to check his CIBIL score from time to time. The score of every applicant should be good enough to meet the eligibility requirements of the respective bank. Here, the points are allotted on the basis of the applicant’s existing liabilities or loans, bank account statement, outstanding credit card payments and loan repayments. An applicant with a good credit score has better chances of getting a home loan application approved.


Choosing the Right Lender

You must do a detailed research for finding out the right bank that could offer you a home loan at discounted rates. It is essential to compare the rates being offered by 5-6 banks to get a better idea regarding the prevalent offers in the market. You should also study the terms and conditions of the banks carefully so that you don’t end up overlooking essential points in the agreement. Try and choose a lender that not only offers you good interest rates but decent processing rates as well.


Negotiating the Rate of Interest

By negotiating the rate of interest being offered by a bank, you could easily reduce the overall cost of the home loan. Before you apply for home loan, you should discuss all the possible scenarios with the lender so that a few adjustments could be made in the interest rate. Even though your bank might say that the interest rates are non-negotiable, the chances are high that they may cut down rates especially for you.

The interest rates being offered by the top 5 banks in India are discussed below.

Bank Rate of Interest
LIC Housing 10.20% to 12.25%
HSBC Bank 10.75% to 11%
ICICI Bank 10.10% to 10.25%
AXIS Bank 10.25% to 10.50%
IDBI 10.25%

As on 5th April, 2014


Reading the Fine Print Carefully

Usually, the home loan agreements offered by the banking institutions are nothing but a set of bulky documents. However, you should still go through the fine print agreement thoroughly so that you could have a look at the terms of the loan contract. Before signing the papers, you should give some additional time to reading to clear all your doubts before submitting the application.


Loan Tenure

The loan EMI is basically calculated on the basis of the loan amount, loan tenure and the rate of interest. So, you must see whether the amount of EMI you’ve got to pay is inversely proportionate to your loan tenure or not. In case the tenure of the home loan is a long one, then you’ll be required to pay lower EMIs. Therefore, it is very important to weigh your options well before deciding upon loan tenure.

Even though the process of home loan application seems to be a simple one, it does come with its own complications. It is best to clear all the doubts beforehand so that an affordable home loan deal can be acquired. Get the best rates on house loan at


YOU MAY ALSO WANT TO:  Find out if your EMI is working for you – Home Loan EMI Calculator

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