Have you been given thought to avail of a home loan of 30 lakh home loan EMI or 40 lakh home loan EMI from a lender? If yes, then it is necessary for you to ask certain questions. Here in this blog, discussed are important questions that you, as a borrower, must ask your potential lender. Let’s have a look at the question in detail –
What types of home loans are offered?
The kind of loan your lender provides is the initial thing to understand. Only if you understand what you are looking for and what option is appropriate for you will it become easier for you to narrow down the best options. This question is necessary because it will assist you in deciding if the loan provider offers the kind of loan that you want. Some lenders just offer specific kinds of loans, while others provide a variety of choices. Also, it is crucial to ask about the benefits and specifics of every loan type.
There are distinct kinds of home loans that you, as a borrower, can avail of. The most popular ones are home loans, plot loans, bridge loans, home construction loans, etc. It is necessary to know each one of them to understand them and make a better decision considering your financial scenario.
Your lender must be able to explain to you all the distinct kinds of loans offered to you in detail. In case the lender is not able to do so, or if the lender is pushing a specific loan type on you, it is better to move on and consider opting for any other lender who can be of better help to you.
What’s the down payment you require to pay?
The down payment is the amount you, as a borrower of a home loan, must pay for taking up a home loan. It generally begins from 10 per cent of the overall home cost. The down payment requirement for the loan must be enquired about by you, especially if you are a first-time borrower. This allows you to understand how much money you require to arrange for availing of the home loan.
How can you compute your home loan EMI?
Your home loan monthly payment, often called the EMI, is the proceeds you must pay each month for your loan. Principal and interest constituents on loan are added to the EMI. It is crucial for you as a borrower to ask for the monthly payment on the loan, as this is how you can know how much you need to budget for every month.
Failing to repay the home loan is something you would not want to witness ever in your life. Thus, for this computing, your home loan EMI and ensuring that it is within your repayment capacity, budget, and cash inflow, would allow you to meet your home loan dues in full and on time with zero stress or worries. To compute your home loan EMI, you can take the help of an online EMI calculator. This calculator instantly shows you the result and even allows you to try different adjustments and combinations to derive suitable results as per your repayment potential.
What’s the maximum home loan tenure?
The maximum home loan tenure infers the length of time you, as a borrower of a home loan, might take to repay the debt. This may be different for distinct lenders. It is an important factor for you as a borrower to know as it will enable you to compute how long you may require to make your monthly EMI repayments.
What will happen to your loan if something happens to you during your loan tenure?
This is an important thing you must enquire about when searching for an appropriate lender. This will make sure that your near and dear ones are not left with the financial burden of making home loan repayments if something misfortunate happens to you.
Your home loan often comes with life insurance coverage for the loan amount provided to you. Thus, if something happens to you, then the lender may make up for the loss through life insurance and not burden your family members for its timely repayments. Ensure to enquire your lender about the home loan insurance coverage and even ensure that you read all the conditions before you sign the final agreement.
Should you opt for a floating or fixed rate of interest?
A prefixed rate of interest home loan for a specific duration has a fixed EMI requirement for a specific time period. In the case of a fixed rate home loan, you must pay the same home loan EMI across the repayment tenure. In contrast, a home loan with a floating rate fluctuates quarterly depending on the market. In the floating rate, EMIs, too, may change over the repayment tenure.
Note that floating rates in most scenarios are beneficial. This is because your home loan most likely lasts for a long tenure, and the interest rate in the tenure may fluctuate as per the market. This endows transparency as the floating rate is linked with the repo rate while the fixed rate is decided by the lender, so there’s no transparency in the interest rate in the case of a fixed rate.
Is there any charge or penalty if you pay your home loan earlier than the tenure?
While paying your loan ahead of schedule might assist you in saving funds on the interest constituent, few lenders usually demand a prepayment charge. This is usually in the scenario of fixed-rate home loans. It is always a great idea for you to double-check with the lender before you place an application for a home loan so that you do not witness any loss later. Even ensure to enquire regarding the lender’s refinancing process to decide what you will require doing in the future in case you want your loan to be modified in its entirety.