A home loan is a type of credit in which the applicant/borrower requests a loan amount to purchase a new house or renovate an existing one. The lender checks the borrower's eligibility criteria and credit report to determine the loan amount and interest rate.
After the Home Loan Interest Rate is approved, the borrower is expected to repay the loan amount plus the additional interest rate over the loan tenure, which can be up to 30 years.
Bank of Baroda offers special schemes on home loans for its customers. There is a concession of 0.25% on the interest rate for a home loan if they already have taken a car loan. The Bank of Baroda Home Loan for customers with Savings Bank accounts is even more beneficial as the applicant's with an SB account do not need to pay any additional interest rate for the home loan, and the recovery of the EMI will be automatically made from the savings account that is linked with the home loan. The loan tenure is also flexible and can go up to 30 years.
The following are the tips and factors that need to be considered while applying for a home loan-
Interest Rate:
The variable interest rates and offers provided by the banks and NBFCs should be checked and evaluated first to narrow down the best lender and deal. Several lenders offer lower interest rates on home loans, but all might not be credible and trustworthy. You should opt for those lenders that offer lower interest rates and flexible tenures. It is also crucial to study the type of interest rate method applied on loan, Floating rate, or Fixed rate method. The EMIs remain constant throughout the loan tenure in the case of the fixed-rate process. At the same time, for the floating rate method, the EMI is computed using the Home Loan EMI calculator after the borrower deposits each installment. The latter approach can prove beneficial as the rates keep falling and the financial burden keeps reducing as time passes.
Credit score:
Having a decent and respectable credit score and report is much more important than it may seem. The credit report and CIBIL score are a reflection of your financial strength and credibility. If you have a credit score of 750 or above, then it is almost certain that the loan will be approved after fulfilling the eligibility criteria and submitting documents. The interest rate can also be lowered if you have a good credit score.
Processing fees:
Usually, banks and NBFCs charge a processing fee of 1% of the loan amount. But if the loan amount is Rs. 50 Lakh, the processing amount can be very high and be an instant troublemaker even before the loan begins. Therefore it is better to look for those lenders who are willing to waive off or reduce the processing fee.
Down payment:
Banks may need you to pay around 15% of your overall loan amount as a down payment when the loan tenure starts. This is an excellent method to reduce the EMIs as the loan amount reduces and proves to be fruitful in the future. Therefore, before applying for the Home Loan, you must secure some funds to immediately make the down payment and clear off a part of the amount.
Conclusion:
It is also critical to read the loan agreement line by line to avoid missing any details about any prepayment or foreclosure penalties that the lender may impose. You should also consider your budget while asking for the loan and thinking about the long-term goals. Try to avail of maximum benefits and schemes offered by the lender to make the home loan experience carefree instead of cumbersome.
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