The demand of home loans has increased massively over the years. As a result of the increasing cost of real estate, a people have started availing home loans for purchasing their dream house. If you are looking forward to buying a property for yourself, a home loan can be extremely helpful. Before you avail a home loan, it is essential for you to be well versed with different terminologies associated with it. Let’s have a quick look at different home loan terminologies.
It is the difference between the property’s value and the loan amount provided by the financial institution. In simple terms, the margin is the down payment you are required to make while purchasing the property.
The offer letter is a formal confirmation letter sent by the financial institution to acknowledge your eligibility as a prospective borrower. It remains valid for 6 months and if you don’t receive a loan within that period, the whole procedure must be started from scratch.
The offer letter usually states the following:
- Value of the loan sanctioned
- Loan tenure
- Rate of interest
- Monthly repayment amount
- Validity of the offer letter
- Terms and conditions of the loan agreement
Equated Monthly Installments (EMI)
EMI is the monthly amount that you are required to pay in order to repay the loan. The EMI is calculated based on the sum borrowed, the rate of interest applicable, tenure of the loan, and the processing fee involved. While availing a home loan, you can get an estimate of your EMI with the help of online EMI calculator. This can help you plan your monthly budget wisely.
Home loans are secured loans where the property being purchased acts collateral. In case you fail to repay the loan, the lender has complete authority to confiscate the collateral to retrieve the losses suffered.
Banks and other financial institutions will evaluate your financial status to determine your eligibility for the loan. This process is termed as credit appraisal. It also gives the financial institutions a better understanding of your repayment capacity. The parameters that are taken into consideration for credit appraisal are listed below.
- Income of the applicant and co-applicant
- Age of applicant
- Applicant’s qualification and profession
- Employer details
- Tax history and credit behavior
- Assets and investments
If you buy a property from someone who already owns it, it is called a resale. While buying a resale property, you should obtain a record of the previous owners. You should also ensure that the reseller has uncontested ownership of the property. Also get tips on making your home loan down payment easily only at Finserv MARKETS.
Now that you are well aware of all the terminologies, make sure that you keep a check on all of these while applying for a home loan. You should also compare various loan offers by different financial institutions before taking up a home loan. This will allow you to settle for a home loan that best suits your needs. Lastly, do not forget to read the terms and conditions of your loan agreement before signing it.
Now that you’re well-informed about the Home Loan terminologies, it’s time to finally get that house you’ve always dreamt of. What are you waiting for? Head over to Finserv MARKETS, and apply for a Bajaj Finserv Home Loan with us, today!!
“Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we works towards fulfilling all your personal and financial needs . What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”