Interest rates on home loans have dropped dramatically. Buying a home has now come within every people’s reach. However, if you are considering taking out a home loan only when you see low interest rates, your decision may be wrong. Especially when there is an environment of uncertainty due to the Covid epidemic. In this, any kind of rush can lead you into a debt trap. Your future goals may also be in threat. So before taking out a loan, you should ask yourself these five questions.
Questions You Should Ask Yourself Before Applying For A Home Loan
1. Have you evaluated the bank and yourself?
Before looking for a home, it is important to find out the bank that makes the correct loan. Get a good understanding of your credit score, loan amount, processing fees, and other fees and prepayment fees charged by the bank. This will let you plan how much loan and time you need. That is why it is important that all the details of the loan are determined first.
2. Do you have a permanent job?
Of course, the interest rates are low. But is your job safe? There is an atmosphere of uncertainty due to the corona epidemic. Before applying for a loan, it is very important to make sure that you are in a financially secure sector. Where work and salary could not be affected. It will be difficult to pay large EMI due to pay cuts or unemployment. Failure to give EMI can affect your credit score. In such a situation, before taking a heavy home loan, it is important to make sure that you can concur EMI or not.
3. Did you default on the EMI of the loan in lockdown?
In recent months, due to the corona epidemic, a large number of people have lost their wages and most of them have even lost their jobs. People have not been able to pay their car loan or personal loan or credit card payments on a large scale. After leaving work, out of business, you have to work with very little pay for another job. All of these things have affected these people’s credit scores. In these situations, even though the individual is eligible for the loan, one may have to be satisfied with the small house.
4. Are you prepared for any financial emergency?
Before taking out a large loan amount, make sure you have covered all the financial risk. In today’s uncertain environment, one can be caught up in many types of crises. Therefore, it is important to keep a reasonable amount for emergencies fund. This helps to overcome the temporary crisis like going to work.
5. Do you have money for the down payment?
RBI has directed all banks and NBFCs to approve up to 80% of the property’s value as a home loan percentage. The remaining 20 percent of the amount must be arranged by the applicant. In such a situation, if you are buying a Rs 80 lakh house, you will have to pay Rs 16 lakh to the bank as a down payment. Some banks may request more money for the down payment. Other expenses like registration fee, processing fee, stamp duty, etc. will also be added.
There is a popular bank for home loans in India i.e. State Bank of India. Before apply their home loan, check SBI home loan documents, SBI home loan processing fee and also home loan eligibility for SBI.