Applying for a home loan is not a piece of cake, it is way easier said than done. It may seem that every bank is out there just to give you a loan, in reality, getting a loan sanctioned can be quite a difficult task. If you don’t properly know terms of the loan don’t sign on that dotted line before you are done reading these few things.
Check the eligibility criteria
To check your eligibility for the loan, check your EMI. If you have another loan sanctioned in your name, there is a high chance that your application would be rejected. The number of dependents on you is also considered by some bank as according to bank the more mouths to feed the lower chance there is of repayment. An unstable income can be a barrier to the process of successfully acquiring a loan.
Select a proper loan type
Before applying to any bank and for any kind of home loan you should understand the basic structure of the two home loans. The first one that most prefer is the fixed home loan in which you will pay the same amount till the end of the loan. Another home loan that you can apply for is a floating loan in which the EMI rises or falls according to market conditions. Though a fixed loan has a higher interest rate than a floating loan.
Read the agreement carefully
The loan agreements are legal documents and can be very hard to understand, try to comprehend the term defaulter and understand what bank is charging in the name of administrative charges or extra fees. Keep in mind the extra charges in the names of prepayments or penalties of late payments when applying for the loan.
Put your foot down when it comes to rate
Choose whichever loan option you like but just keep in mind that it’s your loan and you are going to pay it so keeping that in mind always remember to negotiate on the rate of interest if it’s not up to your financial comfort. Also when applying loan trying purchasing one at the end of the month as at that part of the month banks are under pressure of achieving a set business target and may be more lenient with interest rates and other essentials.
Find a broker that’s on your side
Applying for a loan is a very time taking process and with so many legal terms and conditions. It is possible that you can fall into some legal trap and end up paying way more than needed. The best way to avoid this is to consult a reliable mortgage broker such as Quantum Finance Australia Pty Ltd which can help you deal with all the issues of applying for a loan.
A loan one taken can be a burden on your shoulder rather than financial support. Study the market and your lender very carefully before applying for one.
Tarik Pierce is the founder of InvestorTrip.com and regularly contributes articles to this website.
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While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.