The number of property registrations Chandigarh increased by 51% in April 2018 compared to the previous year. Chandigarh is considered among the top Tier-II cities in India that are expected to have a massive growth in the real estate sector for the upcoming years.
The number of affordable homes in Chandigarh is increasing with the progress in this sector. Also, the number of individuals who avail a home loan in Chandigarh has increased significantly. Here are a few things you must know before taking a home loan.
- Compare the interest rates
Borrowers should compare the interest rates of various financial institutions before availing a home loan. Also, there are two types of interest in the case of home loans, namely fixed interest rates and floating interest rates. As the name suggests, the interest rate in case of fixed interest remains constant throughout the loan tenure. However, floating interest rates change with revisions to the MCLR.
As India is currently in a state of inflation, RBI is likely to increase the Repo rate soon, which will, in turn, increase the MCLR. So, floating interest rates are expected to increase over a long tenure. Make sure that you are aware of factors that impact your home loan interest rate before you avail such credits.
- Choose an ideal loan tenure of your housing loan
The tenure of a loan is a crucial factor that determines the total amount a borrower has to pay against a credit. A short tenure can significantly reduce the total cost associated with a loan at it decreases the interest part significantly. However, it can also increase financial burden on a borrower as the resultant EMI amount will be high.
- Choose an ideal loan amount
Financial institutions offer a high amount in case of home loans as they are a secured form of credit. However, borrowers should refrain from availing a loan amount more than they can repay as it will significantly increase the financial burden on them. It can even lead to defaulting.
- Check if there is any part-prepayment penalty
Borrowers should check for part pre-payment charges before availing a home loan in Chandigarh. They can pay the remaining principal amount of a loan if they have any surplus fund in hand. It significantly reduces the interest part as interest is charged on the remaining principal amount for the rest of the tenure. Part pre-payment amount should be higher than that of an EMI to avail this facility. Borrowers should avail a home loan in Chandigarh from a lender that charges a minimum part pre-payment penalty fee.
There are such lenders that offer home loans with zero part pre-payment penalty charges. Some of the benefits they offer include-
- Flexible loan tenure up to 20 years
- Easy balance transfer facility
- Top-up loan facility
- Be aware of the foreclosure norms
Borrowers can avail foreclosure facility to pay the remaining debt during the loan tenure if they have surplus funds available. It will reduce the interest part of the loan as they will not have to pay the interest amount for the remaining tenure.
However, financial institutions can charge a foreclosure penalty that can exceed the interest part if a loan is at the end of its tenure. Borrowers should consider this facility wisely before availing it.
You should be able to avail a home loan with favorable terms by following the tips mentioned above. Also, make sure that you check your home loan eligibility criteria before you apply.