Top Questions To Ask Your Lender Before Applying For A Home Loan

However, it could also be a big financial decision and an extravagant affair for many. Hence, when buying a dream home, people put a lot of effort into it. One way to accommodate this dream into your budget is to apply for a Home Loan.

However, before you select your lender and submit your Home Loan application, you need to ask your lender some essential questions. Here are a few:

Which Home Loan would be ideal?

Banks and non-banking financial companies offer different types of Home Loans for various purposes. For example, you can opt for a Home Loan for a ready-to-move-in property. You could select a Home Loan to buy a plot, a Home Loan for Non-Resident Indians, or any other Home Loan offered by your bank. Once you understand the different Home Loan schemes your bank offers, you can choose one that matches your needs.

What are the interest rates offered on Home Loans?

When applying for a Home or Housing Loan, ask your lender if the interest rates on your Loan would be floating or fixed. This gives an idea about the risk position of your Loan. In the case of a Fixed Interest Home Loan, the interest rates remain the same during the Loan duration. Alternatively, the interest rates keep changing in the case of a Floating Interest Rate. The changes in the interest rate depend on the alteration in the base rate determined by the RBI.

What are the prepayment charges on your Loan?

If you get some extra money, you may want to prepay the remaining Home Loan with a single payment. However, your bank might charge a prepayment fee in such a situation. Hence, it is good to have an idea about this fee.

What is the processing fee on your Home Loan?

When the application for your Home Loan is approved, lenders ask for a processing fee. This fee differs across banks. While it is usually minimal, it is best to be aware of this fee when applying for Housing Loans.

What is the ideal tenure for your Loan?

The tenure of a Home Loan can differ between one and 30 years for repayment. Besides this, your equated monthly instalments depend on the Loan term. For example, if you choose a longer tenure, your EMI will be lesser and vice versa. Hence, ask about the tenure range available and select the duration carefully.

Conclusion

A Home Loan from a bank enables you to increase your budget when purchasing a home. However, before applying for this financial assistance, you need to ask the mentioned questions to your lender. Asking these questions could prevent any inconvenience in the future. It might also keep you from last-minute shocks.