Home Loan EMI: Buying a house is a dream of all, for which many people add capital throughout their life. There is uncertainty about the current market conditions and the epidemic. In such a situation, financing for the house is the biggest decision. A decision in this can prove to be very critical, such as where to take home loans from. Even after choosing the lenders, there are many decisions, which you have to choose carefully, such as how long the loan has to be repaid. In this way, there are many points that you should consider. Many people have excellent financial information and they know how to take a home loan. However, most people are not aware of what to take care of while taking a home loan. Before taking a home loan, please consider these three factors.
Financial relief for excess tenure
When you apply for a home loan, the decision of tenure should be taken very carefully. Based on this, the EMI to repay the loan is determined. However, it does not have a fixed formula that can be called better for everyone. In such a situation, when taking a home loan, tenure should be chosen on the basis of its repair capacity. Banks generally provide loans for a period of 5 to 30 years. It is necessary to choose the right tenure according to your ability as the loan installment will be completed quickly by choosing the short time but financial stress will be less when choosing a long tenure as the installment is less in the long tenure.
For example, Mohit needs a home loan of 50 lakhs. The bank is providing him a loan at the rate of 9.5 per cent. Now Mohit has to choose how long he should take the loan, that is, how much time the loan installments have to be repaid. If you take a loan of 50 lakhs for 8 years at the rate of 9.5 percent, you will have to pay a monthly EMI of about 74 thousand. However, if he chooses ten-year tenure then he will have to pay an EMI of 46 thousand. Considering Mohit’s budget, he should take a loan of 20 years tenure as he will have to pay less EMI.
HLPP or Term Plan – Which is Best if You Have a Home Loan?
LTV ratio should not exceed
Through the Loan to Value (LTV) ratio, lenders see how risky a loan is. This is the ratio of the loan amount and the value of the underlying asset. The higher the LTV ratio, the more risky the lenders will consider the loan given to you. LTV percentages are calculated by multiplying the LTV ratio by 100.
For example, suppose you have to buy a house of 3 crores and you have 60 lakh rupees in your account which you are going to use as a downpayment. According to the RBI guidelines, there should be an LTV ratio of 75 percent on loans above 75 lakh. This means that you can get a loan of 2.5 crores. In such a situation, it should be kept in mind that if the appraisal is less than the loan you want, then either you have to increase the down payment amount or you can ask your bank to increase LTV by increasing mortgage insurance. If the LTV of your home loan amount is 80 percent or more, then home loan insurance will have to be done. It provides insurance lenders.
On the other hand, if you choose less LTV then you will have to pay more in advance. However, in this situation you can negotiate with your lenders about the interest rate and tenure.
Insure your home finance
Sometimes a borrower fails to repay the loan in the event of a sudden accident and the lenders may also lose their money. Home loan insurance is a better strategy to secure your family from such situations. If you are unable to repay the loan due to home loan insurance, then it will be repaid by insurance. Generally, insurance is available from the same financial institution from where you are getting loan. Therefore, while comparing home loans, the insurance provided by all lenders should also be compared.
Source: www.financialexpress.com