Among several programs issued by the Government, Pradhan Mantri Awas Yojana has been one of the most beneficial schemes for aspirant home buyers. Due to such programs, a remarkable rise in home purchases has been observed, especially when it comes to the affordable housing sector. This has also left an impact on home loans.
According to a recent report, this financial year might witness significant growth in housing credits. The specific number expected is 17% – 19%.
However, there are certain aspects individuals need to keep an eye on while applying for a home loan in Mumbai or any other metropolitan city in India.
Essential factors to keep in mind
Follow the mentioned points as they will guide you to closing a home loan effectively.
- Eligibility criteria
For salaried applicants –
- Must be residing in India.
- The age limit is 23 to 62 years.
- Must have work experience of at least 3 years.
- The loan amount could be within the range of Rs. 10 Lakh and Rs. 3.5 Crore.
For self-employed candidates –
- Should be an Indian resident.
- Must be within 25 to 70 years old.
- The present business must be ongoing for at least 5 years.
- Fix a budget
Find your loan pre-approved so that you can set a budget and process accordingly. This would also help you choose among the properties available.
- Types of interests
Firstly, home loan interest rates can be broadly classified into 2 types – floating and fixed. A floating interest rate might keep altering according to fluctuations in the financial market, whereas a fixed rate would remain unaffected throughout the tenor.
- Loan amount
The amount could be up to Rs. 3.5 Crore. However, this could vary depending on the eligibility criteria, the property’s value, credit score, repayment capacity, etc.
Use an EMI calculator to get the exact amount so that you can choose the tenor and interest rate according to your convenience.
- Cost of loan
This cost includes processing fees, prepayment penalties, interest payments, administrative charges, etc. Your loan is not supposed to have any prepayment charges if you choose a floating rate of interest. However, you would have to pay a nominal fee in case you wish to do a balance transfer of your loan amount to a lower interest rate. Thus, ensure that no charges are hidden before you go for a home loan online apply.
Such credits offer flexible tenors, which could be extended to 20 years and hence, choose according to your repayment capacity while availing a home loan.
- Insurance cover
Look for a suitable insurance cover so that your loan is repaid by the liable company in case of some unfortunate incidents and the burden doesn’t fall on your family members.
To apply for a home loan in Mumbai, individuals need to submit the following –
- ID proof.
- Proof of address.
- KYC documents.
- Latest salary slip.
- Bank account statement for the past 6 months.
If you are self-employed, you would also have to provide evidence stating business vintage of at least 5 years.
Missed payments or loan defaults
Pay your EMIs regularly and never miss out on any circumstances. Missed repayments are detrimental for your CIBIL score as lenders consider such individuals as less creditworthy. In case you default on debt repayment, it will be recorded on your CIBIL report and reflect negatively on your score as well.
Keep these things in mind before you opt for a loan to purchase a residential property. There are numerous home loan offers provided by lenders to help borrowers avail such advances more easily. You must also remember that the typical rate could lie within 9.05% to 10.30% for salaried individuals, whereas it could be 9.35% to 11.15% for self-employed candidates. In simple words, consider all the important things before foreclosing your home loan to avoid any hassle later.