Buying a new house? 7 key factors to consider before you opt for a home loan

livemint.com:

own abode is a goal most of us aim to accomplish. Staying in a rented house can never give you the sense of pleasure that your own property can. But before you set out to buy a property, there are certain things to be careful about.

What if you have the resources to pay back the loan via EMIs but may still not be eligible to take home loan? Additionally, what if your poor credit score is likely to impose a higher interest burden, thus pushing the EMIs upward. And if all is set for you to raise a home loan, then you must be careful about the following factors before you sign the dotted line and become a borrower for many years, if not decades, to come. 1.

Documents needed: You need to have all the required documents such as proof of income to be able to process your loan. If you are a salaried employee then your joining letter, past three months’ salary slips and Form 26AS would be required for the bank to process your application. 2.

Tenure: The loan tenure is an important factor that will determine the amount of EMI (equated monthly instalment). For instance, when your tenure is 15 years for a loan of ₹10 lakh (at the rate of 9 percent interest) the EMI would come to around ₹10,143. This falls to ₹8,997 when the tenure is 20 years.

3. Equated Monthly instalment: Make sure you have a regular income to take care of your monthly cash outgo failing which, the lender could take possession of your asset in order to recover the dues. So, it is advisable to keep the EMI amount to an affordable level so that you can repay the loan easily.

4. Loan amount: Determining the amount of loan is another key factor for the borrowers to deliberate over. For instance, smaller the loan amount, the bigger the EMI, and bigger the loan amount,