Home Loan for the First-time Buyer

Home Loan for the First-time Buyer

Everyone aspires to own a home of their own one day, but the large financial commitment involved can sometimes become a hindrance. This is when home loans come into play; you can avail of home loans from banks to complete the payment for your home and repay the sum back over a period of time using equated monthly instalments (EMIs).

For the first-time homebuyer, taking a hefty home loan might appear a tad daunting, so here’s a breakdown of what a home loan entails:

Eligibility Criteria

Most banks and NBFCs require a borrower to be between the age of 18-60 years and earning a minimum income stipulated by the bank. You can be salaried or self-employed but should have a steady income. For this, you might need to furnish them with salary slips of the past six months.

Down-Payment

Banks never provide the entire cost of your home. You have to dish out around 20% of the cost while the bank provides the remaining 80% as a loan. This means you need to be careful when house-hunting as the total cost should fall within your budget.

Interest Rates

Different banks offer varying interest rates on their home loans. Even if the difference is .25%, it translates into a big sum when EMIs are computed so you need to shop around with different banks before finalizing with the one offering best rates. You also have a choice of opting for fixed or floating interest rates during the tenure of your loan.

Processing Fees

Banks can charge a non-refundable 0.25-1% of the loan amount as processing fee along with 18% GST. Be prepared for this additional payment.

Documents Required

You will need to furnish solid ID proofs like your PAN card, Aadhar card, driving license, residence proof and photograph along with a duly-filled application. A check for the processing fee and previous 6 months bank statements are also mandatory.

Tenure

While a longer home loan tenure might lead to a minor drop in the EMIs, the borrower ends-up doling out a substantially larger amount as interests paid. The shorter the tenure of the home loan, the less the interests paid. A difference in five years of additional tenure can cost you around 10lakhs more as interests paid out!

Location

Finally, choose a home that falls within the jurisdiction of your loaner bank.

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