Planning for Home Loan

Banks and lending company has reduced its interest rate and simplified home loan process. Low interest rate and competitive scheme has made home loan easy reach of common man . If you are first time buyer or planning for home loan, here are guidelines for you to plan your home loan.

Know your lender: Before you choose or sign for a home loan, know your lender. Make good market research on rate of interest, processing fee, penalties and charge for pre-closure. Choose the lender who offers best deal that suits your need and requirement.

Hidden Charges: Hidden charges are not really hidden but borrowers may fail to note or ask lender before signing or applying for loan. For home loan, borrowers need to pay down payment which may be about 20 to 25 percent of property price. In addition to the down payment, borrower will have to pay processing fee and other expense on sanction of home loan. Be prepared to pay some extra other than these charges.

Credit history: Credit history is history of your past borrowings and repaying behaviors. These factors help lenders determine whether to extend credit, and on what terms.

Income Proof: When applying for loans or advance, you will have to show your income source. It can be either from your business, salary or other source. For income proof, you need to provide bank statement for last six month and two years financial if self employed.

Know your insurance company: When you are buying a home or applying for home loan, you need to insure your property and home loan. In case you loss your job or met with accident or in case of death, insurance company will help your family to payoff outstanding loan without causing burden of loan or interest.

Your lender or lending company may not be best person to ask for advice. Make good market research and discuss with your accountant or financial adviser. Contact as a many lender as possible before choosing one for loan or advance. Choose the home loan that best suits your need.