Home Loans

Home Loans for Purchasing your Apartment: What you Should know

If you’re thinking of purchasing a flat in Calicut but don’t have the funds with you right now, you need to consider applying for a home loan. For those who are not very familiar with how it works, here we present the basics:

  • Principal amount – this is the amount of the loan you want to apply for – the amount you need to make up the cost of the flat. Say the flat costs 50 lakhs and you already have 20 lakhs, you need an additional 30 lakhs to purchase the apartment; this will be your principal loan amount.
  • Down Payment – the financial institution that provides the loan will ask you to contribute a certain amount of the cost of the house, ranging from 15-30 percent. Check for institutions that ask for a lower margin (closer to 15%) as it will leave more money in your hands for décor and so on.
  • Loan Eligibility – When you apply for a loan, the bank will check your credit history, combined family income, and other factors. Based on this, they will calculate how much loan they can offer you. If the bank feels your credit history is not so great, they may not offer the full amount you want as loan. The bank will ask you to submit several documents like salary slips, bank account statements, your PAN Card, and so on for this purpose.
  • Joint or Co-Applicant – this can be a parent, spouse, child or sibling. If you have a co-applicant who has a regular income, it will increase your loan eligibility.
  • Interest Rates – Most banks will offer you two types of interest rated: fixed and floating. Under the first system, the interest on your loan will remain the same for the entire duration of your loan; some banks may offer an option to reset the rate after 3-5 years, depending on their prime lending rates, OR to switch to floating (or vice-versa) after 5 years. Under the floating system the interest rates are linked to the prime lending rates and may change several times during the loan tenure; interest may go up some years, and down other years.
  • EMIs (equated monthly installment) – We hear this term often today; it simply means the amount you have to repay your bank every month throughout your loan tenure. The EMI is worked out based on the principal amount, rate of interest and type of interest.
  • Processing fees – every financial institution charges some fees to process your loans, and it depends completely on the individual institution.
  • Pre-payment charges – if you suddenly come into money and want to be rid of the burden of a home loan, you may choose to pay up the entire loan amount and finish the loan; however there is a penalty to be paid for this as banks lose out on interest. The pre-payment penalty differs from bank to bank but is usually in the range of 0.5% to 2% of the amount prepaid.

At HiLite Builders, we have executives who can put you in touch with the right lenders if you’d like to apply for a loan to purchase our premium Calicut apartments. Please see http://www.hilitebuilders.com/properties/ for details of our projects.

 

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