Everything that is needed to know before taking loans

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Home loans make it possible to dream of owning a home. Users don’t have to risk their savings and investments or jeopardize other financial objectives like children’s higher education or retirement. The private property home loanhas several advantages and features.

Loan against property

A secured personal loan that users can get by pledging property as a security or collateral is a Loan against property scheme. These types of personal loans referred to as mortgage loans.

Factors affecting

  • Loan tenure:The interest rate charged by the bank defined by the repayment period. The higher the rate of interest charged, the shorter the repayment period.
  • Credit score: To get a loan against the house at a lower interest rate, a credit score needed of 700 or higher.
  • Type of property: The interest rate charged by the lender determined by the market value and property.
  • Profile of the applicant:The interest rate charged by the bank influenced by factors such as age, occupation, and income.

Determination of loan borrowing capacity

  • Age

The borrower should not be more than 58 years old when he pays his last EMI, according to most banks. The length of a home loan determined by age. If approaching 50, the bank will only offer a six- to the eight-year repayment period. If  35, however, the re-payment period can easily be extended to 20 years.

  • Salary structure

Allowances, perks, bonuses, and performance-based pay aren’t usually counted as part of the salary at most banks. If these components make up a significant portion of a salary package, the loan eligibility is likely to suffer.

  • Liabilities

Liabilities must not surpass 55 to 60 percent of a borrower’s monthly income.

  • Cash flow and expenses

These are the primary criteria used to determine whether or not a person is eligible for a home loan. Most banks estimate that up to 40 percent of the total of a borrower’s monthly income used to cover EMI payments.

Things to keep in mind

  • Loan tenure and amount
  • Interest rate
  • Processing time
  • Eligibility
  • Insurance cover for the loan amount

To obtain this private property home loan, an applicant must mortgage property as collateral. The loan amount determined by the property’s value referred to as Loan to Value. The borrowed funds must then be repaid in equal monthly installments, or EMIs, over a set period at a predetermined interest rate.

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