10 Important Things To Consider Before Taking A Housing Loan

Akansha Verma
Dec 30, 2019   •  1 view

Most of us nurture a dream of owning a home someday. A self-owned home brings with it a heightened sense of safety, security & assurance. You might be looking at a house as an investment option – or simply, a nesting place. Whichever way you look at it, paying for the house from your pocket in entirety can be a tough call for most.


 This is where the banking & finance sector steps in with its array of housing loan product offerings. They also have attractive add-on product options for you with range of benefits.

 Home loan is a useful option as you can repay in monthly instalments over a period of time, which is convenient. You can also choose the loan tenure as per your convenience. 

 By now, you might feel that taking a housing loan is such an easy thing.

Well, not exactly! Buying a property is a once in a lifetime decision, so you must devote the required time and mind space before taking the final call. 

In this article, we will list down ten crucial points that you must keep in mind before you apply for that home loan.

 Know Your Eligibility

The first thing you need to check when you look at loan options is your eligibility and the documents required. Most financial institutions require a regular source of income and documents of home ownership or contract between you and the builder before they consider your request. However you don’t have to worry in case you have irregular source of income or proper income proofs are not in place. There are many Non-Banking Housing Finance Companies In India to support.

 Available Loan Options 

 Do extensive research on the housing finance options available in the market. There are a large number of companies each with its bouquet of products. Choose one which meets your needs and also allows you to repay the loan amount comfortably. The important points to compare are – down payment, tenure, and EMI amount.

Rate Of Interest (ROI)

This is the rate at which you buy the loan from the bank. Check out the rates various financial institutions are offering. Confirm whether the rate is fixed (Rate of interest stays constant throughout the tenure) or floating (Rate of interest varies, depending on announcements from Government or/and regulatory bodies). 

Loan Tenure

If you choose a long tenure, the EMI amount will be lesser, but you will pay higher interest on the loan. The case is the opposite when you select a shorter tenure. So, choose your loan tenure after a good thought, keeping in mind the “comfortable repayment” factor.

Foreclosure Options

You would, for sure, want to get the loan as soon as you can, by making the full repayment before the tenure is over. This is called “foreclosure” in loan terminology. By foreclosing, you save on interest payment. Nowadays, some banks offer foreclosure facility without prepayment charges, so check out this point as well.

Any additional Charge

Financers charge a processing fee before they disburse the loan. Do look at the processing fee different financiers are charging and zero in on the particular institution which does not charge too much.

Read Documents Carefully

Before you sign on the dotted line, spend enough time reading the document. Check the fine print for penalties, additional charges, any add-on insurance, etc.

Down Payment Margin

Financial institutions don’t finance 100% of your loan requirements. You need to pay 15% - 20% from your own pocket. The lending institution loans you the balance. So, if you can make some more down payments, please do so. It will lessen your loan burden.

Appropriate EMI

There is a range of EMI options to cater to a variety of borrowers. Be judicious in choosing an EMI which won’t be a burden on you. Try to keep the EMI within 40% of your monthly income.

Loan Insurance

The housing finance amount is not small. So, you will do well to protect your loan. Select suitable loan insurance when you are completing the formalities. Should something happen to you during the loan tenure, the repayment burden doesn’t come to your family – the insurance company settles it with the financer.

So, our suggestion to you is – invest enough time before choosing the financer like Muthoot Fincorp and Muthoot Housing. Do extensive research and look at all the options before making the final decision.