What Thing You Should Make Sure While Getting A Home Loan
Who will lend?
When we think of financing a home purchase, we usually think of loans from commercial banks. There are other ways to finance the purchase of a home. The loans include loans from Housing Finance Companies and Non- Banking Finance Companies. These options can be looked at individually.
Commercial banks are scheduled
The maximum share of the housing loan portfolio in the housing finance market is held by Scheduled Commercial Banks. The large consumer base these banks enjoy may be to blame. Public Sector Banks and Private Sector Banks are governed by the Reserve Bank of India. Most of the stake in a private sector bank is held by private individuals while the government holds the maximum stake in public sector banks.
HFCs are housing finance companies
The National Housing Bank monitors the second largest players in the housing finance market. HFCs offer loans at a higher rate than other banks. Stamp duty and registration charges can be added in the loan amount, which is not possible in the case of commercial banks. Those who can't pay a high down payment are usually the customers of HFCs. Those who don't get a loan from a bank approach HFCs. Home loan rates for some of the top HFCs in the country are mentioned.
The choice is between a bank and a housing finance company.
How does one decide whether to take a home loan from a bank or a HFC? Under certain circumstances, a loan from a HFC can be better than a loan from a bank. Before choosing between a bank and a HFC, consider these points.
HFCs can be used by someone who wants to borrow more money and contribute less from their own pocket.
According to the guidelines of the Reserve Bank of India, SCBs can only lend up to 80 percent of the property value. The lender has to pay at least 20 percent of the property value on his own. When the stamp duty and registration charges are added to the amount, the borrower ends up paying a lot of money.
HFCs regulated by the NHB take into account the stamp duty and registration cost when calculating the total cost of the property. This can make a big difference in a country where the charges can be as high as 8%.
HFCs can be used to evaluate business income, eligibility, and credit scores.
Getting other loans and products is easier if you take a home loan from a bank.
The rate of interest is floating or fixed.
Selecting between a fixed and flexible home loan rate is one of the major concerns when applying for a home loan. We will take a look at both options.
There is a fixed interest rate.
Fixed interest rates mean that the rate of repaying the home loan is fixed for the entire loan tenure, and does not change as per the market fluctuations. Most of the monthly payments are used to pay off the interest while the last part of the tenure is used to service the principal amount.
The interest rates are floating.
The rate changes as the market conditions change. Home loans with floating interest rates have a base rate and floating element. The floating rate changes if the base rate changes.
So what to do?
There is a choice between a floating and fixed interest rate. It might be easier for you to choose between the two if you've kept up with the projections of the financial market. If there are projections of home loan rates changing, you should look into a floating interest rate scheme. If budgeting and certainty about monthly expenses is a concern for you, then you may want to consider fixed rates.
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