If you are planning on purchasing a home, now may be the ideal time to do so. The home loan market is lucrative, especially with competitive interest rates, seamless digital processes, and the array of tax benefits associated with them.
Amidst these advantages, though, the challenge lies in selecting the perfect home loan suited for your needs. Fortunately, a perfect home loan does exist. All you have to do is find it, and you can do that using the following factors.
Review the Home Loan Interest Rate
Interest rates are a fundamental aspect of any home loan. In India, the home loan interest rate can be fixed or floating. Understand the difference between these two to make the right call. Today, floating interest rates are prevalent, as they follow market rates.
Floating interest rates are beneficial to the customer since the savings are passed on to you when market rates go down. Since the RBI controls these rates and is always thinking for the benefit of the Indian citizen, it’s likely that you’ll enjoy a lower interest rate in the long-run.
Calculate the Monthly Instalments
Before finalising your home loan, calculate the Equated Monthly Instalments (EMI). Home loans are long-term loans, so they will be locked in for years. EMIs are going to make an impact on your financial situation and future planning. And for such a substantial expense, the plan needs to be viable and affordable. To make more accurate decisions, please use the free online Home Loan EMI Calculators that are available on the websites of leading banks in India.
Previously, it wasn’t easy to calculate the home loan EMIs you would be required to pay, which often involved long talks with a bank’s representative. Today, banks have begun offering a home loan EMI calculator. Use the kotak Home loan EMI calculator to determine the monthly instalments you’ll have to pay based on interest rate, home loan amount, and other variables.
This will help you achieve your primary goal: getting the perfect home loan. You’ll be able to adjust your expenses, choose the right loan amount, and as mentioned before, plan well ahead.
Assess the Eligibility Criteria
Your home loan eligibility determines whether you qualify for a home loan or not, along with the loan amount. Banks conduct a mandatory housing loan eligibility check when you apply for the loan. This involves checking your financial status, creditworthiness, and repayment capacity based on factors like monthly income, age, credit score, existing loan obligations, and the years left to your retirement.
Fortunately, reading a bunch of documents isn’t necessary to check your eligibility. Banks have created an eligibility calculator. You just have to enter details like employment type, monthly income, existing EMIs, and so on. Based on all these factors, the bank gives you the results.
Check the Maximum Borrowing Amount
The maximum borrowing amount depends on the eligibility criteria, the property’s amount, and the monthly income. This is due diligence on the bank’s part to check your repayment capacity. Now, most banks typically fund around 70-75% of the property’s value, with some lenders like Kotak Mahindra Bank, being more aggressive, going even higher.
This means you’ll have to pay a down payment of 25-30% of the property’s value. The loan amount has to be in line with your needs as well as your financial circumstances. Financial advisers typically suggest prospective home loan takers adopt a prudent rule of thumb: keep home loan EMIs within 40% of your net household income. Choose the borrowing amount after deliberating over these facts.
Look For Perks
Perks matter and make the experience better. Since availing a home loan comes with a range of challenges, banks want to make the experience seamless. The digital application was a first step in that direction. However, banks have also begun offering additional perks. For instance, Kotak Mahindra Bank offers an instant sanction letter and has slashed the processing fee by half.
Ultimately, finding the perfect home loan requires careful consideration of the factors we’ve mentioned above. Check the interest rate, calculate the EMIs, review the eligibility criteria, and so on. Also, you must look beyond these things. Suitable terms and interest rates matter, but the vetting process should also include how the lender is committed to meeting customer requirements. For instance, post-disbursal services are important in long-term loans like home loans. Consider all these things, and you’ll be well on your way to choosing the perfect home loan for yourself.
About Kotak Mahindra Bank
Established in 1985, Kotak Mahindra Group is one of India’s leading financial services conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group’s flagship company, received a banking license from the Reserve Bank of India (RBI), becoming the first non-banking finance company in India to convert into a bank – Kotak Mahindra Bank Ltd.
The Bank has four Strategic Business Units – Consumer Banking, Corporate Banking, Commercial Banking and Treasury, which cater to retail and corporate customers across urban and rural India. The premise of Kotak Mahindra Group’s business model is concentrated India, diversified financial services. The bold vision that underscores the Group’s growth is an inclusive one, with a host of products and services designed to address the needs of the unbanked and insufficiently banked. As on 30th June, 2023, Kotak Mahindra Bank Ltd has a national footprint of 1,788 branches and 3,047 ATMs, and branches in GIFT City and DIFC (Dubai). For more information, please visit the company’s website at https://www.kotak.com/.
This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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