What are the things you should keep in mind while taking a home loan?

Posted on

Generally, you take a home loan for the purchase of a house/flat, plot, or construction/renovation. Sometimes a home loan is also taken for the enhancement or repair of the house. Here we are giving you all the necessary information about the home loan.

How much loan can you take?

Before starting the process of home loans, assess how much you earn and how much loan banks can give according to that. Your ability to take a home loan depends on your ability to repay it. It depends on your monthly income, expenses, and family income, assets, liabilities, stability in income.

Banks first see whether you will be able to repay the home loan on time or not. The more money you have in your hands every month, the more your home loan amount will increase. Usually, a bank or lending company sees whether you will be able to give 50 percent of the monthly income as a home loan installment or not.

The loan amount also depends on the tenure of the home loan and the rate of interest. Apart from this, banks also fix the upper age limit for a home loan.

What is the maximum home loan you can take?

  • A down payment of 10 -20 percent of the cost of a house or flat has to be made. This is your own contribution. After this, the loan is available up to 80-90 percent of the value of the property.
  • It also includes charges like registration, transfer, and stamp duty. Even if the lending institution approves you of a higher amount as a home loan, it is not necessary that you take the entire amount as a loan.
  • While buying a property, you should make a maximum down payment so that the loan burden is minimal. Keep in mind that the bank lending on the home loan charges you a lot of interest over a long period.

Is it necessary to apply for home loan?

Yes, co-applicant is necessary in most of the cases. If the property is in the name of two people, then in that case both of them must be included in the home loan as well. If you are the owner of the property then any person from your family can be the applicant.

What are the documents required for home loan approval?

A checklist of documents to be attached is included in the home loan application form itself. Along with this, you have to put a photo.

From the legal documents for buying a house, the bank has to give you the salary slip (office attested and self-attested) along with the identity and residence proof and the bank statement for the last six months along with Form 16 or Income Tax Return.

Some home loan institutions also ask for life insurance policies, share papers, NSCs, mutual fund units, bank deposits or other investment documents as pledge.

Do banks issue documents for every installment paid every year?

Every year banks send this type of document to you. This statement helps you to know about the home loan. Many banks also provide the facility to download it online.

Should I get insurance for a home loan?

It is always better to cover the risk of this home loan. It can be a big relief for your family in case of your absence due to some reason. You can take a pure term plan or take a mortgage insurance plan for this. Both single and regular premium options are available in this type of plan.

Leave a Reply

Your email address will not be published.