Follow This Checklist Before Getting a Housing Loan in Chennai
The real estate market in Chennai witnessed 17% growth in the first quarter of 2019 compared to the same period last year. More than 3,000 properties came into existence, thereby reviving the market considerably.
Families living in rented accommodations or looking to opt for a house can take advantage of this growth and purchaser their own property. Plus, the easy and quick availability of home loans in Chennai can also aid them in making this desire a possibility.
Individuals can follow the checklist mentioned below when opting for such loans in the city:
- · Know the Types of Home Loans Subsidy Schemes: There are different types of subsidy schemes available. Availing a standard home loan in Chennai will put unnecessary interest burden on your income. The most popular type of subsidy scheme is the Pradhan Mantri Awas Yojana (PMAY). There are also many state-led schemes that provide subsidy on home loan interest payments.
Home loans under PMAY are available to EWS, LIG, and MIG families that don’t owna pucca house and have not availed a housing scheme before.
If you need a loan for renovations, learning about home improvement loan eligibility criteria will help you secure one with ease.
- Compare Home Loan Interest Rates: Different lenders provide different types of interest rates and additional charges. Since 2016, RBI has made it mandatory to charge interest rates based on the marginal cost of fund based lending rate (MCLR). The market forces determine MCLR on which lenders charge their spread. Spread refers to the percentage charged for the profit of the bank.
There are two types of interest rates:
- Fixed Interest Rate – This type of interest rate remains the same over the whole tenure of the loan. Market forces do not affect them.
- Floating Rate – Floating rates change according to market conditions. It can increase or decrease substantially over the loan tenure. Floating interest rates are beneficial in case the borrower opts for part pre-payment or foreclosure.
Choosing a borrower that provides floating interest rates on home loan in Chennai will reduce the cost of loan considerably in case you want to go for foreclosure.
- Learn About Part Prepayment and Foreclosure: Part pre-payment refers to the payment of more than one EMI. Foreclosure refers to paying off the whole loan amount before the tenure ends. Lending institutions generally charge a penalty on such prepayment. There are certain important factors that you must keep in mind while prepaying your home loan.
- Compare Additional Charges: Apart from interest rates, the lending institutions are authorised to charge additional fees and rates on loan. These are generally in the form of administration charges, processing fees, legal fees etc. Processing fees ranges between 0.25% – 0.5%. However, different lenders charge different processing fees on their home loan offers. Make sure you choose a lender that provides the lowest additional charges and fees.
- Compare Loan Tenure: The tenure of your loan considerably affects your EMI payments. You must understand that the higher the loan tenure, the higher is your monthly instalments. However, choosing a shorter tenure on home loans will help you save money on the cost of loan. You can use an EMI calculator to know about your monthly obligations.
- Disbursal Time: Borrowers who need funds as soon as possible, should learn about the time taken to disburse funds by different lending institutions. Reputed lenders like Bajaj Finserv take as low as four days to disburse funds.
Lastly, take note of the documents that a lender requires before you go for a home loan online apply. These can include identity proof, address proof, salary slips, income tax returns, property documents, etc.
