5 ways to reduce costs when taking a home loan
A home loan is repaid over a period of several years. We list ways to bring down the costs associated with the loan.
Taking a loan for your home is both a simple and a complicated procedure. It can be really simple if you understand the terms of the loan, as also the numbers involved.
The home loan involves other numbers, apart from the principal and interest. Working around these other figures helps you reduce the costs associated with taking the loan for your home. Follow these 5 steps:
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1 Understand your eligibility. Understanding your loan eligibility will save a lot of time and money in the long run, by giving you an idea of how much loan you can get from the lending institution. You can now streamline the process of house selection, looking for homes within the parameters of eligibility.
2 Increase your contribution. The loan amount is granted up to a maximum of 90% of the overall cost of the house, while the remaining 10% is contributed by the applicant from their own resources. It naturally follows that if the applicant has more reserve funds, then they will need to borrow less from the lending institution. Take stock of your finances and assess how much money you have in savings and investments. Also look to monetise other assets like gold to raise more money.
3 Get a pre-approved loan online. This is a time and cost-saver, which helps those people who have not yet finalised a house but are close to doing so. For instance, if you have zeroed in on a property and are currently looking at the property documents, you can start the process of loan application by opting for a pre-approved loan online. An online pre-approved loan is more affordable for the applicant as well. Thus, by the time you are ready to register the sale agreement, you will have the loan waiting for you.
4 Negotiate the processing fees. If you share a long relationship with the housing finance company, you are in a better position to negotiate the charges and fees that the lender levies on you for processing the loan application. Take stock of at least three different housing finance companies before you decide to opt for the best one. Shopping around also helps you find the best rate of interest and understand the application process and paperwork.
5 Get periodic interest rate revision. Post-demonetisation in November 2016, premier banks and financial institutions in the country have reduced their lending rates on loans for homes. Thus, customers today are better placed to pick the best home loan products at reduced rates of interest. Lending rates are further expected to reduce in 2017, so you could get the interest on your loan reduced for a lower EMI.
