How To Get Home Loan And What Are The Important Things To Keep In Mind?

Home Loan is an excellent way to turn your dream of owning a house into reality. However, when taking a home loan, it’s essential to be aware of various factors, especially the charges that come along with it. Apart from the terms and conditions, it is crucial to understand what charges the bank may impose. Let’s take a look at the common charges associated with home loans.

While saving money for your dream home is a great plan, there are times when the savings fall short, delaying your goal. In such cases, a home loan proves to be extremely helpful in making your dream come true. But, it’s also essential to make timely payments to avoid any inconvenience.If you are considering applying for a home loan, it is important to be aware of the charges involved along with the terms and conditions.

Application Charges

Whenever you apply for a loan, you need to pay an application fee. Even if your loan application is rejected, this fee is non-refundable. Therefore, financial advisors suggest that you should first research and be sure about the bank or financial institution you are applying to.

Mortgage Deed Charges

When you opt for a home loan, the mortgage deed charge is one of the biggest fees you will encounter. It is usually calculated as a percentage of the loan amount. However, several banks and NBFCs waive off this charge in some cases.

Legal Fees

Once you apply for a home loan, the bank or financial institution may hire external lawyers to check the legal status and documentation of your property. The cost of the lawyer’s services is borne by the customer. To save on legal fees, ensure that the property you are investing in has already received approval from the bank or financial institution.

Prepayment Charges

If you decide to pay off your loan early or make an early repayment, the bank may charge you a prepayment penalty. This charge is intended to cover the bank’s costs and interest rate losses. The prepayment charges may vary across banks and financial institutions, depending on the type of loan.

Commitment Fees

Some banks charge commitment fees if the borrower fails to repay the loan within the specified time frame. This fee is generally levied on undisbursed loans (loans that have not been paid out yet).

Things to Keep in Mind

Before applying for a loan, it’s essential to compare interest rates and terms from different banks or financial institutions.
Ensure you take a loan amount that fits your budget. If you borrow a large amount, you may struggle with repayments later.
Before applying for the loan, calculate the interest and savings to avoid any financial problems due to the loan.
Finally, carefully read the terms and conditions before signing the loan agreement. If you do not understand any clause or want to request changes, make sure to discuss them with the bank.