Home loans, also known as home equity loans are a type of public loan loaned by the borrower to purchase a new house or renovate the existing one. Here the home acts as the collateral asset and hence the amount of loan to be sanctioned to the borrower depends upon the value of the property for which the loan is taken. These loans are generally used for the majority of the expenses like home purchase, home repair, home renovation, and so on. Generally, they are of two types i.e. closed and open ends, these types of loans require a person to have a good credit score in order to get the best loan available during that time. Hence in this article, you will know various sanctioning steps that one needs to follow while taking home loans.
How to choose the Best Home Loans?
Choosing the wrong home loans can cause borrower a huge amount of financial liability. Hence some pointers need to be considered before taking a particular home loan and hence it is important to be carefully while choosing the home loans. Following are the pointers for the same:-
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| Best Home Loans |
- Interest rate- This factor depends upon the loan amount, the past credit history of the borrower and the loan repayment time. It generally varies between 9 and 12 percent. But selecting the loans having a lower interest rate is beneficial during repayment as it can earn you more time bracket for the repayment. One must understand the rate-setting mechanism for the loans to gauge a better idea.
- LTV Ratio- Loan to Value ratio is the portion of the property value that will be financed by the institutions offering loan for the property purchase. The rest payment goes as down payment that needs to be paid out of the own pocket. Hence one needs to select the loan that offers a higher percentage of LTV ratio and lesser down payment from the own pocket.
- Credit history- Maintaining a good credit history and score is important to get a loan at low-interest rate and higher repayment bracket. However, these days’ banks do sanction loans to those borrowers who have bad credit scores but for that extensive documentation needs to be presented.
- Tenure- Selection of loans offering a larger tenure for repayment with reduced costs on EMI will be hugely helpful to get the best home loans. On an average, this tenure lasts for about 25 years and is subjected to increase as per the terms and conditions of the lending institute.
- Processing time and processing fee- Sometimes the processing time gets delayed to a major extent and thus creates problems for the borrowers. Hence institutions offering emergency loan services and much lower processing fee i.e. 0.50-1.50 percent of the sanctioned loan amount should be opted for to get the best options for a loan.
Steps to avail the Best Home Loans
Following steps need to be followed in order to get the home loan sanctioned in an easier m and convenient manner: -
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| Home Loans |
- Keeping a good record of the personal income and other parameters in order to know the amount of loan for which you are capable of.
- It is important to know about the loan steps of the bank in advance and hence needs to be prepared accordingly
- Keeping ready the required documents
- Reading the terms and conditions of the loan before signing the deal
- Choosing the proper EMI method
- Taking the necessary steps for the home protection schemes
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