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Four Things You Must Remember Before Applying for Home Loan

Be ready with following items before applying for Home Loan. You need to decide Home Loan Interest Type like you wish to go with fixed or floating, Amount that you want to borrow from bank, Home Loan Tenure and Necessary Documents etc.

Six Things You Must Remember Before Applying for Home Loan

Be ready with following items before applying for Home Loan. You need to decide Home Loan Interest Type like you wish to go with fixed or floating, Amount that you want to borrow from bank, Home Loan Tenure and Necessary Documents etc.

Be ready with following items before applying for Home Loan

Select Home Loan Interest Type: You have two options i.e. Floating or Fixed. In fixed rate home loan, it interest rate remains fixed for 2 years or 5 years, the rate is reset to the rate prevailing after that time period. As floating rate varies according to the fluctuations in interest rates prevailing in the market, you can take the advantage of lower interest rates, if you opt for Floating Rate option. In a fixed rate loan, interest rate is higher. Hence, most of the borrowers opt for floating rate loans rather than a more expensive fixed rate loan.

Decide Home Loan Amount: Bank usually gives 80% of the assessed value as home loan and not the full amount of the assessed value. You have to decide on the loan amount you wish to avail considering its EMI that you can afford to pay each month till the tenure.

Plan Home Loan Tenure: The longer the tenure, more interest you need to pay to the bank. Hence decide the shortest tenure based of your affordability of EMI payment.

Keep Necessary Documents Ready: If the bank approves your home loan, you are required to provide documents related to the home you are planning to buy and if all such documents are provided to the bank on time, your loan amount will be disbursed quickly.

Check your Credit Score: Credit score measures your creditworthiness. You should know your credit score before applying for home loan. If you have a good credit score, it will give you opportunity to negotiate with the lender on interest rate, tenure and other terms of home loan. You will get lower interest rate on your home loan, if you bargain with the lender on the basis of carrying good credit score.

Down Payment Amount: Be ready with the funds to be given as down payment. Banks usually lend you 80% to 85% of the value of your residential property and the balance that you need to give out of your own pocket is known as down payment. You should arrange for this fund in advance. There are many ways to secure the down payment amount.