Buying a house is a huge investment and one that is going to require a lot of planning. Given the current real estate prices, buying a house by simply relying on savings is mostly unheard of. A good thing is that financial institutions offer various home loan plans that homebuyers can apply for. With a home loan, one can arrange for about 75%-90% of the property cost, depending on the loan amount. However, before you apply for a home loan, it is very important to first make sure that the lender is offering a good deal.
Some home loan borrowers have struggled with clearing their loans. A lot of times, the reason for this is that they have not focused on choosing a suitable repayment plan. It is very important to make sure that the tenure chosen to repay the loan is convenient for your budget.
So, take a look at a few factors that need to be kept in mind while choosing a home loan repayment tenure:
Borrower’s age
It is very important to note that financial institutions take into accounta borrower’s age while deciding whether to approve their loan application. This is because lenders prefer their borrowers to still be earning during the entire tenure of their loans. This is to ensure that they can easily repay their home loans. So, while choosing a repayment tenure, it is advisable to choose a tenure that gets completed before you retire.
Home loan EMIs
Most home loan borrowers prefer to choose the longest tenure available to repay their loans. The reason for this is that the monthly instalments of the loan are easier to pay off in smaller amounts, which would be the case with a long repayment tenure. However, if you are looking to save money, choosing a short repayment tenure can be better. This is because by choosing a short repayment tenure, you are cutting down the number of monthly instalments. This will help in reducing the interest payments that get accumulated with each instalment, thereby saving on the total cost of the loan. However, this will increase the EMI payments, so ultimately, it is essential to find the right balance while picking a repayment tenure.
Loan amount
It is very important to keep the loan amount in mind while choosing the repayment tenure. Make use of a home loan EMI calculator to check various amounts. This can help in knowing about the kind of amount that falls under your budget. The calculator will also help in understanding which home loan interest rates are affordable.
By keeping all these factors in mind, you can choose a repayment tenure that suits your goals. Make sure to consider various home loan plans to understand which plan suits your budget the most before applying for one. Lastly, do not forget to check with the lender about the documents required for a home loan. This will ensure that the documentation process goes smoothly without any complications.
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