Essential tips for securing the right home loan

Purchasing a home is a significant milestone, and securing the right home loan can be a key part of this journey. With various lenders offering customised loan options, understanding housing loan interest rates and eligibility criteria can help you make a well-informed decision whether you are a first-time homebuyer or planning to refinance your home loan.
This guide simplifies the homeownership process so that you can choose a loan that best fits your financial requirements.
A home loan is a secured financial solution that allows you to borrow funds to purchase a property, with the property itself serving as a collateral. Lenders offer home loans with repayment tenors that can stretch up to 30 years, making it easier for borrowers to repay through manageable EMIs. Choosing the right loan requires careful consideration of factors such as the interest rate, loan amount, and repayment terms.
One of the most important aspects of a home loan is the . It directly impacts the overall cost of borrowing. Interest rates can be classified as:
●Fixed Interest Rate: Where the interest rate remains constant for a specified period, offering predictable EMI payments
●Floating Interest Rate: Where the interest rate varies based on market fluctuations, potentially lowering your EMIs when rates decline
Most financial institutions, including banks and non-banking financial companies, generally provide home loans with floating interest rates. Bajaj Housing Finance Limited – a leading housing finance company (HFC) – also offers ‘dual-rate home loans’ that can help borrowers benefit from market fluctuations. This allows borrowers to start with a fixed interest rate for the first three years, after which the loan transitions to a floating rate, potentially offering benefits if market conditions become favourable.
A is a handy online tool that can help you estimate your EMIs based on loan amount, interest rate, and repayment tenor. It can help you assess the feasibility of the loan and plan your finances by adjusting variables until you arrive at a manageable EMI amount. Some advanced calculators also offer an amortisation schedule to help you understand the month-wise breakdown of your EMIs into principal and interest components.
Lenders evaluate several factors before approving a home loan application. The key eligibility criteria include:
●Age: Applicants should typically be between 21 and 65 years old
●Credit score: A CIBIL score of 750 or higher increases approval chances and may help you secure a lower interest rate
●Employment type: Lenders typically prefer salaried applicants with stable jobs in the public or private sector or with an MNC, while self-employed individuals should have a well-established business with a vintage of specific years
●Property valuation: The market value of the property also affects your eligibility
Improving eligibility by maintaining a high credit score, reducing existing liabilities, and opting for a joint home loan can increase approval chances.
To choose the right home loan is it advisable to compare lenders, consider additional costs, and assess repayment flexibility. Research thoroughly, plan your finances wisely, and select a loan that aligns with your homeownership goals.
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