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Factors to Consider Before Opting for a Home Loan


Home Loan ● Home loans, also known as mortgage loans, is a financing facility provided by financial institutions to purchase a home. ● Home Loan consists of: ○ Adjustable or fixed interest rate, & ○

Payment terms.

● A customer needs to take into consideration number of factors before finalising on home loan.


Factors to Consider Before Opting for a Home Loan ● Type of Home Loan ● Interest Rates ● Loan Term ● Lock-in Period ● Fees & Charges ● Lender


Type of Home Loan â—? Choose between a traditional term loan or a flexible home loan.

â—? A Traditional term loan is appropriate if one has strict & predictable cashflow pattern whereas flexible home loan makes sense if one is looking for flexibility in paying the loan.


Interest Rates ● Choose between floating or fixed rate of interest.

● Floating rates vary based on market trends whereas fixed rate isn't fixed as banks revise the interest rates after few years.

● Always choose the banks offering lowest interest rates.


Loan Term â—? Home loan tenure impacts a borrower's repayments and the amount of interest one pay's on the loan.

â—? Shorter tenure results in lesser interest rates & lower amount that needs to be paid to the lender & vice versa.

â—? Always opt for shorter tenure to lower the loan cost.


Lock-in Period ● One will incur a penalty if home loan is paid before the end of a loan tenure which is a Lock-in Period.

● Penalty ranges between 2%-3% of the principal amount of loan.

● Some banks don't impose penalty if prior notice is given.


Fees & Charges ● Home loan borrower may incur host of fews & some of them include application fees, stamp duty, redraw fees to name few.

● Many of these fees are negotiable.

● Ask for fee estimates from the lender.


Lender â—? Choose the bank you are comfortable with.

â—? Look for lenders after sale service, customer support or weekend support before opting for one


Factors to Consider Before Opting for a Home Loan  

Home loans, also known as mortgage loans, is a financing facility provided by financial institutions to purchase a home. A customer needs to...

Factors to Consider Before Opting for a Home Loan  

Home loans, also known as mortgage loans, is a financing facility provided by financial institutions to purchase a home. A customer needs to...

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