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If you are taking a home loan for the first time, then you must be aware of a lot of things, such as interest rate, credit score, documents related to the home loan, and other charges related to home loans.
Let us read on to understand the things that people must be aware of regarding the home loan.
Credit Score:
It indicates your creditworthiness and shows lenders that you are financially disciplined.
Interest Rate:
Every individual should verify and consider the home loan interest rate of several financial institutions. An individual who wants to avail a home loan should compare various lenders for the lowest interest rates available.
Home Loan Tenure
Every individual who wants to apply for a home loan should decide on home loan tenure before availing of a home loan.
Processing Fees
Processing fees are the charges that a home loan borrower needs to pay to the lender.
Equated Monthly Installments
Equated Monthly installments are the monthly payments that a borrower makes towards repaying the loan.
Home Loan Documents
You should read the terms and conditions given by the lending institution before you sign the documents related to the home loan.
Down Payment
When you avail of a home loan, you should make a down payment of around 10% to 15% of the total home loan amount.
Additional Charges
Ensure that you discuss additional charges levied on your home loan with the lending institution beforehand.
Prepayment Penalty
As per the RBI guidelines, a lending institution is not supposed to charge the prepayment penalty. With no penalty on prepayment, you can make a partial payment whenever you have any excess cash.
Foreclosure Norms
Foreclosure of your home loan is completing the repayment of the outstanding amount before your home loan tenure ends. The sooner you repay your loan, the less interest you pay.