Getting a home loan made easy

You can find the right home loan with sufficient research and the right loan provider.

The dearest wish of many a person today is to be able to afford to buy a home. The good news is that a sluggish real estate market and a multitude of financial institutions designing innovative home loan products in India, are making this dream a reality for people all over the country.

But taking a home loan is often not the straightforward process most of us envision it to be. Half the job is done by finding a reputed home loan financier. But the other half — that of selecting the right loan and making the choice based on the right information — is up to the home buyer. And this is where it pays to read the step-by-step guide we’ve compiled for you on taking the right home loan.

· Step 1: Checking your eligibility. Your home loan eligibility decides how much loan amount you can reasonably expect to get. Start by using a home loan eligibility calculator to find out your eligibility based on your annual income. Knowing your eligibility helps you take stock of your finances and lets you pare down your choice of homes accordingly. Do remember that your eligibility can be increased if you make your employed spouse a co-applicant.

· Step 2: Find out your EMI. This is the factor everybody is interested in — how much EMI do I have to pay every month? The EMI is deducted directly from your income on the same date every month. Use a home loan EMI calculator to know how much your outgo will be. This figure is non-negotiable and you cannot ask the lending institution to not deduct the EMI if you are short of funds! Use the home loan EMI calculator to arrive at an interest and tenure that is suitable to your budget.

· Step 3: Find out the rate of interest. One home loan is more expensive or more affordable than another on the basis of the interest rate being offered to you. Currently, home loan interest rates have lowered after demonetisation, and they are expected to fall a little more in the coming months. You will be offered a fixed rate or floating rate of interest by the lender. You may select a floating rate of interest if you are confident of repaying the loan earlier than the tenure. The lender may also give you the choice to switch between the two interest rates later.

· Step 4: Select the loan tenure: The loan tenure also decides the EMI you pay. For instance, if the tenure is shorter, you will have a higher EMI. Correspondingly, the EMI will be lower if the tenure is longer. Those who are confident of an increase in income and of repaying the loan quickly should go with a shorter tenure.

· Step 5: Opting for the right financial institution. Every bank and reputed financial institution today offers a range of home loans. It is wiser to research the best options today, basis the rate of interest, the loan disbursal process, evaluation and paperwork process, processing charges, and if the lender is open to negotiating the home loan rate.