Home loans are something that a lot of us have to deal with, right? After all, we all want to have a home we can call our own and work toward that goal.
But there are some less well-known parts of getting a home loan and choosing a house that is not brought to light.
Let’s take a closer look at these necessary questions to answer before submitting your Bandhan Bank Home Loan application.
What steps should someone take before getting a home loan?
When getting a home loan, it’s important to save up enough money for a down payment, have an emergency fund that’s worth at least six times your monthly bills, and make sure you can afford your EMI by making sure your EMI to income proportion (including your new loan’s EMI) stays between 50 and 60 percent.
Also, make sure you check your credit score before applying for a home loan. Your credit score is one of the most important factors that lenders look at when deciding whether or not to give you a loan, and it’s also the basis for setting lending rates using the risk-based pricing method. If your credit score is on the low side, you should take steps to raise it gradually before applying for a home loan.
Also, because Kotak Home Loan have bigger loan amounts and longer terms than other important financial goals, it would be smart to get an insurance policy that would cover the remaining loan amount if you died unexpectedly so that your family wouldn’t have to pay off the loan.
What are the benefits of getting a Bandhan Bank Home Loan online instead of in person?
Instead of going to branches or calling different lenders to get a home loan, you can use online financial portals to compare and choose between different potential lenders who offer home loans based on your eligibility criteria, such as your monthly income, credit score, etc. You can compare lenders based on things like interest rate, length of the loan, loan amount, processing fee, etc., and then choose the one that best fits your financial needs.
Do both banks and HFCs offer home loans with variable interest rates?
The RBI told banks that, starting in October 2019, all new loans with a variable interest rate must be tied to one of four external benchmarks. These are the repo rate linked lending rate, the 3-month or 6-month treasury bill rate, or any other FBIL-published benchmark.
But NBFCs, including HFCs, haven’t been told to link their floating-rate loans to external benchmarks yet. Most of them have been offering floating-rate home loans that are tied to internal benchmarks like PLR or any other benchmark that the HFC has chosen.
When compared to most other lenders, Kotak Home Loan not only has lower interest rates, which is mostly due to the fact that they get their money from cheaper sources, but they also usually have a more transparent way of setting rates and passing along changes in rates faster than most HFCs, especially when they are linked to external benchmarks.
Because of this, customers have usually gone to banks first when they need credit. But because HFCs have a greater degree of flexibility when it comes to deciding who is eligible for a loan, their share of the lending market has steadily grown.
Even though most public sector banks have the lowest Bandhan Bank Home Loan interest rates, which can be as low as 7% p.a., they also have strict eligibility requirements and take much longer to process and give out loans. So, people who can’t get Kotak Home Loan from banks must get them from HFCs, even if they have to pay more in interest. They can always try to transfer their balance to a bank with lower interest rates after they’ve paid off their home loan.
Lenders like Home Loan offer a Pre-EMI repayment option for home loans that have only been partially paid out. This is usually the case when a house is still being built. With full EMI, you have to pay both the principal and the interest. With the Pre-EMI option, you only have to pay the interest. A borrower has to pay interest, called Pre-EMI interest, only on the loan amount that has been paid out so far, based on how the project is going, until the final loan payment. The pre-EMI interest on a Bandhan Bank Home Loan would have to be paid every month from the date each payment was made until the date full EMI payments began. The actual full EMI of the home loan starts after the last payment is made or when the property is taken over.
Some lenders offer a system where home loan borrowers can start making payments on the principal amount as well as the Pre-EMI interest on Kotak Home Loan.
Under this plan, their EMIs would be based on the total amount of money they’ve gotten from their loans, including both the principal and the cost of interest.
What does Pre EMI mean? When is Pre-EMI the right choice?
Compared to regular EMIs, which include both principal and interest payments after a Home Loan is paid out, Pre-EMI payments are less expensive until the loan is paid off or the property is taken possession of. The latter can be a good choice for borrowers who want to spend less money or pay less in the first few years after buying an under-construction property, who expect a cash flow boost in the near future, or who just want to sell the property when it’s finished and/or they take possession of it.
What about the length of a home loan? How to decide which one is best?
Your choice of Kotak Home Loan term would be based on how much your monthly payment would be. Simply put, a shorter term means a higher monthly payment, but the total cost of interest is lower. On the other hand, a long-term means a lower monthly payment but a higher total interest cost. So choose the term with an EMI that you can easily pay.
