Interesting Research on Loans – What No One Ever Told You
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Factors to Consider Before Taking a Home Loan
These elements are made specifically so that you don’t miss the opportunity to attain your dream without having to pay the money up front. Taking a home loan may seem like a complicated process. You need to know some elements of a home loan before applying to get one. You will not qualify for a loan if your credit score is poor and your earnings not stable however if you have a strong loan repayment capability, a stable income and a good credit score you can qualify for a home loan.
Factors affecting eligibility criteria can begin with calculating your home loan’s eligibility through EMI calculation. As a rule, banks have a 40% to 50% limit of the income of the borrower such as the allowance and basic salary. Banks also consider the credit history of the borrower. You will be required to pay a high-interest rate, and your amount will have to be reduced in case you have a poor credit score and if you have an existing loan. People having a stable income, a good credit score or a good capability of repayment does not struggle to get a loan like people with poor credit score and erratic earnings. You get a home loan more easily if you have a co-applicant.
You should know the types of loans that your bank is offering. Floating interest loan and fixed interest loans are the two common types of loans offered by most banks. In the floating interest loan, the interest aligns itself with the market conditions and this cause EMI fluctuation. The fixed interest loan is where the interest is constant and the EMI to be paid is constant throughout the loan repayment period. It is no wonder that fixed interest home loans have a high-interest rate of 2.5%, unlike floating interest loans.
Do not forget to negotiate your interest rate regardless of the home loan that you select. You will need to haggle with the banks since they normally have a set edge, but you can argue based on being their loyal customer who has an account with them. It becomes easy if your credit history is clear. Banks can be flexible at the end of the month if they want to do business with your further if you place your application at the end of the month you stand better chances of getting the loan.
The fine print is the Home loan agreements are legal documents with all the loan details. Pay the EMI on time. Ensure you carefully read the loan agreement before you sign. Also be careful about the hidden charges, penalty charges, loan processing fees, and others. You end up in more problems if you don’t fully understand the contents of the loan agreement.