Things to Ask before taking a Home Loan

Things to Ask before taking a Home Loan

Becoming a homeowner is a heady experience, but for the average person, this dream is usually possible only with the backing of a home loan. The practice usually involves making a down-payment which is roughly 20% of the cost of the property. The remaining is paid by the bank providing the home loan.

Do note that every bank has its own set of policies when it comes to approving loans. Hence, loan applicants will need to clarify all their doubts from the respective banks before accepting the home loan. Here are some commonly asked questions:

Which bank makes the best loaner bank?

The best bank to borrow from is one that offers you the best deal. This includes the lowest interest rates, the lowest processing charges and the best tenure possible. However, do be careful and go with a reliable bank or NBFC for your home loan.

Does the bank give the exact amount I need?

As per RBI rules, banks cannot give more than 90% of the property’s value. In reality, most banks give only 80% of the property’s value.

Are my age and profession important for taking a home loan?

Banks need to reduce their risk exposure. Your age, occupational stability, and monthly income are important deciding factors in determining your eligibility for a loan. Younger persons with stable monthly salaries are more favored.

What is the tenure for home loans?

Ideally, the upper limit for loan repayment is the retirement age or 70 years of age for the applicant. While the average tenure is for 20 years, it can range anything between 5-30 years.

Can there be a co-borrower for home loans?

While friends are not favored as co-borrowers, most banks allow family members to be co-borrowers. Spouses are given greater preference over other relatives, however.

Can I avail of other loans while repaying a home loan?

You can apply for other loans while you have a home loan running concurrently. The banks will, however, take a close look at your capability to repay more than one loan at a time.

Is there a penalty for loan pre-payment?

As per RBI directive, loans with fixed interest rates don’t qualify for a penalty for pre-payment; this doesn’t apply for fixed interest rate loans, however.

What are the consequences of default?

The bank has the right to possess the property and auction it off if you are unable to repay the loan.

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