Factors to Be Considered For Home Loan Comparison

Home Loan comparison is very vital when you decide to take up a home loan. Buying your dream house is possible by making a wise choice of the home loan. Most of us choose the home loan based on the interest rates, but there are various other points that come into play when you make a home loan comparison. A detailed study of the various financial institutions and their terms and conditions is the first and the foremost step. You need to gather information regarding the eligibility criteria, interest rate, EMI, other charges, and so on.

Every bank will have their own criteria for deciding on the eligibility. When you do a home loan comparison, it's very important to get the maximum eligibility so that your cash down payment can be reduced to a greater extent. The eligibility depends on your income level and also the credibility. If you work in a listed company, you could manage to get higher eligibility. This is because your job is considered much secure in a listed company. The banks will analyze your credit standing to ensure timely repayment of the loan. You could club your spouse's income, if any, to increase the eligibility amount.

The most important factor that any common man would look for is the interest rates. Along with the rates, it's also important to select the type of interest, that is, fixed or floating. For this you need to study the market conditions. Fixed rate is the one where the rates are fixed during the duration of the loan. In case of floating rate, it is dependent on the base rate of the banks. If the base rate increases, the loan interest will also increase and vice versa. If you expect a future decline in the interest rates, you could choose floating rates. But if you are a kind who doesn't want to take up any risks, fixed rates will be a safer option. Analyze the table of EMI to ensure that it fits into your monthly budget. You must be confident enough to save the required EMI every month and beside leave out some money for any kind of personal commitments too.

Housing Finance comparison will be incomplete if processing fees are not taken into consideration. This is the charge by the bank for getting the approval for your loan. This does not guarantee that your loan will be sanctioned. To get the approval and complete the formalities, the bank will charge a small percentage of the loan amount as processing fees. This is not refunded to you even if your loan is not sanctioned.

There may be times when you get an appraisal in your income and you are capable of repaying the loan principal amount. Under such cases, if the prepayment is done to close the loan, the bank will charge a percentage as prepayment fees. This differs from banks to banks. Some may not even charge such fees, whereas others do as a policy decision. This also has to be considered during the home loan comparison.

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