Home loan is the common financial tool for everybody to purchase a home. When you want to purchase a home with the help of the house loan, you need to conduct a research about to gain a bigger picture rather than the first impression that it creates in your mind. We will explore few hidden truths about home loans and help you take an informed decision while exploring the choice. Readout this current article to know few important facts about house loan.
Get To Know About Home Loan
Fixed rates are not fixed always
The rate of interest is the first and important factor that the people look at while taking the house fiancé. As misconceived by many, the rate of interest on the home loan is not fixed throughout the tenure of the home loan. A loan of the house is a combination of fixed and floating rate of interest. When you go with the fixed rate of interest for your home loan, it does not remain fixed throughout the tenure of the loan. Both the banks and other lending institutions have right to re-fix the interest rate after a certain period of time. Make sure you check this fixed term of the lender before applying for home loan.
Buying a property under construction
If you are buying a property under construction with the help of the housing loan, the lender may release partial payment for the building to construct the property. You will be liable to make interest payment for the amount transferred to the bank. There will no deduction in the principal amount till you take possession of the property. The EMI you pay for the house loan during the process of construction will be an addition to your loan amount. Pre- EMIs are never dearly. If you are looking to save an additional amount on the loan, it is advisable to choose ready to move in property over the property under construction.
Choosing the tenure of home loan
Many banks today offer the loan for the period of 30 years. Is it a wise option to choose such long tenure to reduce the burden on your monthly budget? No, because you will be paying more interest on the loan. The idle tenure you can choose to repay the home loan is 10 years. In case, you cannot close the loan within this interval, you can pick 20 years. Choosing 30 years of the tenure will be your last option if you think you will be getting a good pension even after retirement. You can apply for the loan with the help of the co-applicant.
Bank demand interim security
You will be surprised to hear banks ask for interim security for a limited period of time till you get the new title deed on your name. There is a short interval between getting the title deed on your name after registration. To reduce the risk during this short term, banks may ask to pledge some collateral equal to the home loan amount. Check the terms of your lending bank to avoid surprises later