Home Loan Basics To Help You Buy That Dream Home

Owning a property is a dream that everyone wishes to achieve in their life. It is an important milestone for the family when they move into their own space no matter how big or small it is. With the property prices hitting the roof, home loans are the best way to realize your dreams. With new villa projects in Bangalore on the rise, it is easier to find your dream home and settle down. If you are on the outset to apply for a housing loan, here are some important points you need to keep in mind before getting one. 

Budget It Right

Before making any investment, it is important to sit down and analyze your financial situation to understand how much you have in your savings and what amount you are looking for when you apply for your loan. Apart from that, you need to consider any investments you already may have and include the monthly payment you need to make for your housing loan and see if the money left is comfortable to meet your family expenses. 

Down Payment

Even though a housing loan is a feasible option, the loan itself may not cover all the costs. A down payment of at least 15% to 20% must be made to cover the entire cost of the property. Also maximizing the down payment reduces the amount you need to borrow from the bank thereby reducing the risk and monthly payments further. It is a good idea to start saving for down payment well in advance if you are planning to own villas in Bangalore city

Understanding Home Loans

There are different types of home loans available for you to choose from with varying interest rates. 

• Adjustable interest rate loans are directly linked to the interest rate of the bank that is lending you the money. If the bank changes the lending rate, the interest rate for your loan also would change. 
• If you go for a fixed-rate loan, the interest rate gets fixed at the time of borrowing and remains the same regardless of any fluctuations to the lending rate of the bank.
• Combination loans offer you the best of both worlds by taking part of the loan at a fixed interest rate and part of it at the adjustable or floating interest rate.

It will be a good idea to sit with a mortgage advisor and understand which option would be best suited for your type of loan and your investment capabilities.

Documentation

Another major part of borrowing is the documents needed for getting a home loan. 

• KYC: These are basic documents such as identity proof and address proof that has to be submitted. You could check with the bank on what could be passed as an ID Proof and address proof document and submit accordingly.

• Proof of income: In order to check your lending ability, the bank may require proof that you are employed and your monthly salary is what you claim it to be. Therefore, the last three months’ salary certificate is a mandatory document that the banks will look for while applying for a housing loan.
• Property Documents: Documents related to the property you’re buying should also be submitted to understand your loan requirements. The title deeds of the property and the sale deed is mandatory for the bank to carry out due diligence on your property.

You could also get quotes from multiple banks and then choose the one that works best for you to buy the property. With great understanding and careful planning, your dream of owning a home could soon become a reality.