Your home is the most significant investment you will ever make in your life. Hence, you cannot leave it to chance. A lot of planning goes towards acquiring your dream home. After all, you plan to live in this home for a significant part of your lives. You would like your house to be the best. You need the best interior decorations and furniture. Hence, it is natural that you should search for the Best Housing Loan to finance your most cherished asset.
How do you plan for your Home Loan?
You have to consider a lot of things when you plan for a Home Loan. Let us help you with the planning process.
Home first or loan first?
There are two ways of approaching the situation:
- Search for your dream home, finalise it, and then approach the bank for a Home Loan.
- Approach a bank, take a pre-approved Home Loan, and then search for your dream house.
We shall consider the first option. Naturally, you have a budget in mind. You should start your planning quite early in your career. Start saving money for your dream home right from the first day of your job. You earmark a specific portion of your income towards forming a corpus for your home. Have a separate account and deposit the funds in it. You can invest the money in productive assets so that it grows faster than the regular savings account. Many options are available on the market such as the FDs in banks, mutual funds, and so on.
You need this corpus to cater to the following expenses when you decide to go for the Home Loan:
- Banks have products where they finance 75% to 90% of the value of the property depending on the amount of loan you avail. It entails that you have to pitch in with your margin or contribution in the range of 10% to 25%.
- Your bank loan does not cover the cost of stamp duty and registration charges. The stamp duty depends on the location where you purchase the property. In case you wish to buy your home in Tamil Nadu, the stamp duty is 7% of the agreement value or the guideline value of the property whichever is higher.
- Banks charge processing fees in the range of 0.35% to 1% plus GST. Keep these funds available in your savings account before you apply for a Home Loan.
- There are other expenses such as legal scrutiny charges, valuation charges, equitable mortgage charges, brokerage charges, and so on.
- Once you finalise your dream home, you can approach Home Loan service providers like MyMoneyMantra to check out the Home Loan options available to you. The advantage is that you get quality guidance such as assessing your profile, assistance in selecting the right loan, help in preparing the documents, and so on.
- Finalise your bank, pay the processing fees, and submit the documents called for by the bank. On receiving the sanction, you bring in your share of the margin and complete the disbursement formalities. Move into your dream house and have the time of your life.
You can opt for this process if you are not very sure of your budget. Most of the banks have facilities where they offer pre-approved Home Loans depending on the income documents you submit to the bank. You know the extent of financial support you will get from your bank.
It helps you to search for homes within this budget. Also, you have an advantage wherein you can negotiate with builders for a better price. Builders feel more confident in dealing with you when they are aware you have a pre-approved Home Loan offer. You can also take advantage of exploring properties in the bank pre-approved projects. You get a good range of houses to choose from.
However, you have to start saving early to cater to expenses like stamp duty, your margin, and the other costs stated in the earlier paragraph. Once you finalize the home within your budget, you can approach the bank with the necessary papers. The bank does a thorough re-appraisal of your Home Loan application before approving the same. On receipt of the sanction letter, you can proceed with the documentation and disbursal. Complete the disbursal and creation of equitable mortgage formalities before shifting to your dream house. You can now use the money you have saved for the interior decoration, furniture, and other aspects of beautification.
As you see, you need a lot of planning before you buy your dream home. Pay the instalments on time and have a great time with your family in your cherished home.