Owning a home has always been a big dream for many people, especially young ones like millennials. But in today’s world, where the economy can be unpredictable, buying a home isn’t easy. If you’re thinking about buying your first home, you need to understand something called a “home loan.” Here’s some basic info:
Types of Interest Rates on Home Loans
Fixed Interest Rate Home Loan:
The interest rate remains consistent throughout the duration of a fixed-interest-rate home loan. This offers borrowers a sense of stability, as the interest rate won’t change even if there are major shifts in the economy. Initially, a significant portion of the Equated Monthly Installments (EMIs) goes towards paying the interest, with principal repayment becoming more prominent later on.
- Advantages:
- Provides certainty for borrowers as the interest rate stays the same.
- Helps with budgeting due to a fixed monthly repayment schedule.
- Disadvantages:
- Typically, fixed-rate loans are slightly more expensive, often 1%-2.5% higher than floating-rate loans.
- Borrowers miss out on potential interest rate cuts during the loan tenure.
Floating Interest Rate Home Loan:
- A floating interest rate home loan is characterized by an interest rate that fluctuates based on market conditions.
- The interest rate can go up or down depending on how the market performs, offering borrowers advantages and disadvantages.
- Advantages:
- Usually cheaper than fixed interest rate loans, especially when the market is stable.
- Borrowers can reap the rewards of lower interest rates during downturns.
- Disadvantages:
- Market volatility can lead to sudden increases in interest rates, resulting in higher EMIs.
- The cyclical nature of this loan type means that interest rates can fluctuate frequently.
- If interest rates rise significantly, the loan can become burdensome for borrowers, especially if they exceed a certain threshold, like 11.5%.
Who Can Get a Loan?:
- You have to be between 18 and 60 years old.
- You need to have a job and earn a certain amount of money.
- You need to earn more than a certain amount of money set by the bank.
Essential Financial Preparations for Your Home Loan Journey
- You need to prove you have enough money to pay back the loan each month.
- If you already have other loans, it might be harder to get a home loan.
- You need to have some money saved up to pay part of the house price upfront.
Documents You Need:
- Complete and sign the application form, and attach a recent photograph.
- Provide proof of identity and residence. For identity, options include your PAN Card, while for residence, you can use a copy of your passport, driving license, or any recent utility bill.
- Include a cheque to cover the processing fee.
- Submit your bank statements from the last six months.
If you’re thinking about buying a home in Tathawade, here’s a tip: check out Prithvi Group’s new homes called Prithvi Paradise Next Gen Homes. Now is a good time to invest in real estate, especially in projects like this one. With the right information and preparation, buying your own home can also be possible!
