Purchasing a home and becoming a homeowner are two of the largest financial decisions we make in life. Home loans are known as the “gateway” to achieving the dream of home ownership, and this is exactly why. A well-thought-out financial plan must be in place in order to work toward making this ambition a reality through a home loan. Because home loans are expensive loans with protracted terms, failing to do so might have major long-term consequences on one’s financial life in many different ways. It is therefore important to adhere to this 10-step process before submitting your LIC Home Loan application, even if low Home Loan Interest Rates 2022 All Banks are being provided to entice potential homebuyers and borrowers.
Don’t forget to look at the Loan to Value Ratio (LTV). This is the percentage of the property’s value that you receive as a home loan.
It’s important to keep in mind that a greater LTV suggests a lower share of the value would be paid by the borrower and vice versa. In addition to the current market value of the property, the LTV ratio is also influenced by your ability to pay back the loan, your credit history, and several other criteria.
Examine the affordability of your EMIs thoroughly. Since home loans require a significant amount of money, you must carefully calculate your income and expenses to determine whether you can pay the EMIs on a monthly basis. Your EMI to income ratio, or the percentage of your income that is used to pay your monthly mortgage, shouldn’t be higher than 40 to 50 percent for a quick acceptance of a house loan. Accordingly, your EMI payment shouldn’t account for more than 40 to 50 percent of your monthly revenue.
Before choosing any home loan lender, compare as much as you can. One should decide on their lender only after conducting a thorough comparison of the various banks and housing financing firms (HFCs). Before selecting a lender, compare the Home Loan Interest Rates All Banks, processing costs, prepayment penalties, and other costs. Even after you have accepted the loan at the applicable interest rates, you should continue to monitor rates from different lenders in order to maintain the option of refinancing or transferring the amount of your LIC Home Loan. To compare these, you might go to online markets.
Examine eligibility requirements carefully. Thanks to the idea of a house loan eligibility calculator, it is now simpler for borrowers to determine if they are eligible for a loan from the home loan company or not. Because loan eligibility is based on a number of variables, including age, net monthly income, the EMI to income ratio, etc., you should make use of this feature to determine your eligibility. It is better to check it with the eligibility calculator of the specific bank/HFC to prevent having your house loan application rejected in the later stages or having to pay higher interest rates on Home Loan Interest Rates 2022 All Banks.
A solid credit profile significantly increases eligibility. Banks and HFCs issue loans to borrowers with good credit scores more quickly since they indicate a good payment history, sound money management, and higher credit worthiness. A person is more likely to be approved for an easy LIC Home Loan if they have a CIBIL score of 750 or higher. Your credit score is simple to check online, and you can also learn the necessary procedures to raise it. But even if your credit score is low or nonexistent, you might still be authorised for a house loan (since these are secured loans), but the interest rate would typically be higher than those provided to individuals with strong credit histories.
Don’t be careless while choosing the term of your housing loan. As your EMIs are closely correlated to the term of your loan, you should choose them carefully. Lenders typically give tenure between 10 and 30 years. Many people hold the false belief that the longest term available is best because of reduced EMIs. However, as you pay the same interest rate on Home Loan Interest Rates 2022 All Banks for a longer period of time, your interest outlay increases with the length of your tenure.
It is therefore always suggested to utilise the EMI calculator tool that is available online to estimate your EMIs in accordance with the Home Loan interest rates, which include the interest component based on your loan amount, relevant interest rate, and payback tenure.
Do not only consider the interest rate cost of your mortgage. It is advisable to determine the entire cost of your mortgage, not just the EMI or interest rate. The prior awareness of the complete cost offers you a clear understanding of your financial commitments and prevents any unforeseen load from numerous levied charges.
Be certain about the kind of interest rate – The calculation of the monthly instalment for a LIC Home Loan is based on the interest rate. Therefore, one should choose the type of interest rate based on their risk tolerance and the present and anticipated state of the market. If you are happy with the amount of your monthly payment, there is a chance that interest rates will increase soon, or if rates have just decreased and you want to lock in that rate, you should choose a fixed rate. However, if a borrower anticipates a rate decline in the near term, they may opt for a floating rate for their house loan. If your lender offers this option, you can swap from one to another by paying a small charge, and you can even choose a fixed and floating rate combination.
Disturbing your rainy day fund is a big no-no. Whenever you decide to take out a home loan or any other loan, regardless of whether the Home Loan Interest Rates 2022 All Banks is low or high, always make sure that your decision should never interfere with your emergency fund, which is meant to keep you from going broke in case of emergencies. Therefore, it is better to make informed decisions when choosing your home and home loan lender than to regret them later when your finances have already been damaged. Right from saving for a down payment to making EMI payments on your LIC Home Loan, make sure your emergency fund always has enough money to cover any unexpected expenses. This will guarantee that you have the resources necessary to deal with unanticipated circumstances that may arise during the loan term.