Here are a few tips to keep in mind before taking a home loan:
Look at the processing fees and other fees
Different banks charge different processing fees, which could be anywhere between 0.50 per cent to 1 per cent. During festive and through special offers some banks even waive the home loan processing fees. It's best to check online before taking a decision on home loan.
Study the interest rates
Remember that home loans are unlike auto loans. Their size is rather large and a small difference in interest rate can make a huge difference. Even a marginal difference of 0.10 per cent can make a difference on a loan size of Rs 30 lakhs.
Presently, State Bank charges the lowest interest rates on home loans.
Time for approval
Public sector banks are known to take a longer time to approve projects, in comparison to some housing finance companies or private sector banks. If you need a speedy approval, it's best to take a look at some of the housing finance companies.
Read the loan agreement carefully
It's important that you peruse through the loan agreement carefully. It's of course a detailed document, but you would do well to study its contents.
Ensure you have a steady job
It's important to enure that you have a good steady job, so as to ensure that you are able to pay all the EMIs, until the completion of the loan. Try to set aside a corpus for repaying your loan early, unless you want to continue to paying the same, so as to enable you get tax breaks.
If you are in the highest tax bracket, it pays to take a loan
If you are in the highest tax bracket, it would be good if you can buy a home with a home loan. This is because you are likely to get tax breaks for the principal amount paid to the tune of Rs 1 lakh and Rs 1.5 lakhs for the interest paid.