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HOME LOANS - USEFUL INSIGHT TO GET THE BEST DEAL



Buying a home is a dream come true and also a big ticket purchase. So if you are purchasing your property with a combination of personal funds and loan amount then it is best to remember a few points in order to get the best bang for your buck. Offers are being given today by banks and financial lending institutions all over the country at the best lending rates . The rates of interest are attractive and vary slightly from bank to bank. It starts with your personal credit assessment and your actual requirement. Once that is sanctioned then starts the journey of repayment that may take remaining length of your life. Here are a few points to understand to ensure that you get the best from your home loan deal.

Types of Interest rates :
If the borrower is not satisfied with the new interest rates then he can move to other lender or close his financed amount by "advance repayment of entire loan" or takeover of the outstanding loan amount , financed by other lender  This can be done either by advance payment of the mortgage or moving to another lender. Since interest rate cycle is a bit slow , it is wiser to select a floating rate loan now.

Interest rate trends :
During the tenure of the amount financed, keep monitoring your lender interest rates and also be watchful about market rates of competition and RBI notifications.. If the initial tenure of the loan was 25 years then the rate increase might even stretch the tenure to 30 years if you do not want your EMI quantum to increase.

Component of Principal in EMI
The principal and the interest are the two constitutes to EMI payment. There are banks mostly in the public sector, where the principal component makes up 45% of the EMI.Ratio of principal amount and interest has to be also considered and this shall not cross 70:30 raatio . .

Insure your property by opting right insurance policy
Ensure to go through entire terms and conditions of your lender agreement and also club insurance immediately on the property. Many home owners ignore this. The home finance agreement may say that in case you fail to insure the property or pay premiums regularly, the lending bank would reserve the rights to debit  your loan account. The sum assured must be equal to full market value of the property

Compare banks before finalizing the right lender . Every bank has different rates and different criteria for granting loans. A few  banks offer the best repayment schemes but remaining might make more attractive offers on interest rates and initial processing. After all it’s a financial commitment of almost 20 years so be watchful and convinced about your  options .




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