If you are a first-time home loan borrower or plan to borrow, you should be aware that interest rates are higher than they were a year ago. Your income and ability to repay the loan will be a major factor in determining your loan eligibility.
Banks home loan interest rates differ depending on the credit score, amount, tenure of loan, and type of interest.
Your age, qualifications, the number of dependents you have, your spouse’s income (if any), your assets and liabilities, your savings history, and the security and longevity of your job are all significant considerations when disbursing the loan.
EMI
The term “EMI” stands for “Equated Monthly Installment,” which is the sum you must pay to us on a particular date each month until the loan is fully repaid. The principal and interest components of the EMI are constructed so that in the early years of your loan, the interest component will be considerably bigger than the principal component, while the principal component will be much larger in the latter half of the loan.
When will be the reset date decided for the loan? How will the reset impact the current Rate of Interest (ROI) in case the MCLR increases or decreases?
According to the ICICI Bank, “The reset period and date will be decided on the date of first disbursement. In case of increase in MCLR on the reset date, the ROI will increase which in turn will impact the EMI/tenure of the loan depending on the option exercised by the borrower.
In case of decrease in MCLR on the reset date, the ROI will decrease which in turn will impact the EMI/tenure of the loan depending on the option exercised by the borrower.”
Basic documents to check before buying a new property
- Sale Deed
- Title Deed
- Approved Building plans
- Completion Certificate (For Newly constructed property)
- Commencement Certificate (For Under-construction property)
- Conversion Certificate( If agricultural land is converted to non-agricultural)
- Khata Certificate (especially in Bengaluru)
- Encumbrance Certificate
- Latest Tax Receipts
- Occupancy Certificate
How is the interest calculated?
- The interest on home loans is usually calculated either on monthly reducing or yearly reducing or daily reducing balance by Bank. ‘SBI charges interest on daily reducing balance’.
Specifics are mentioned below: – - Annual reducing method: The principal, for which you pay interest, decreases at the end of the year under this method. As a result, you keep paying interest on a portion of the principal that you have already returned to the lender. As a result, the monthly reducing system’s EMI is actually lower than the annual reducing system’s.
- Monthly reducing method:In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.
- Daily Reducing method: In this approach, the principal on which you pay interest decreases as soon as your EMI is paid in whole. The daily decreasing system treats a year as having 365 days regardless of whether it is a leap year or not, and the EMI is lower than the monthly reducing system.
Source By: economictimes
