Choose home loan options strategically

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Choose home loan options strategically
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Now the things are once again rolling back again
in real estate sector. Banks are offering lower
rates to the new borrowers but the existing
borrowers are waiting for their due rates to come
down. Before applying for home loan there are
certain factors like fixed, float, monthly rests,
yearly rests, fees, penalties, lender, rates
about which an applicant should think over. At
times lenders offer numerous flexible products
the applicants can go for those options also.
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You can take home loan from banks for
constructing a home or purchasing a ready-built
house, flat or residential plot. The banks even
re-finance borrowers existing loans which they
might have taken from the other bank. The
sanction of loan amount is based on certain
factors like borrowers age, salary, educational
qualifications, credit history and previous
employment track record. If you are double
earning then you can club the income of your
spouse in order to increase your loan
eligibility. Usually, banks only lend an amount
where your monthly EMI outflow is 30 to 50
percent of your salary. Any amount exceeding than
this can make repayments towards the loan a
burden.
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In an initial year when the borrower makes EMI
payments to the lender the major portion of the
money is marked for the interest repayments. As
the year pass by the principal component
increases. Now days buying a house have become
difficult especially for those who have started
earning recently. To make possible for this
segment of people to buy a house stepup loan a
flexible and novel product has been designed.
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In a step-up loan, a kind of home loan, varying
EMIs are offered over the loans tenure. This
loan is affordable for the young working
population that has embarked on its career and
holds tremendous growth prospects as during the
initial period of the tenure the EMIs are
small. It is presumed that the financial status
of the borrower will improve, get promotions and
earn increments, as the years roll by, the EMI
outflow increases. Even though EMI increase with
time, it will still appear affordable for the
borrower.
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In step-up loan borrowers eligibility for taking
loan depends upon the future earning potential so
a huge amount is lend much more than his current
income. Hence, those earning lesser income
initially, can also afford a larger home with
their loan. There is one more option a step-down
option in this the burden of EMIs comes down with
time. If the borrowers financial position is
strong then he can take this option. Suppose a
borrower is close to his retirement years and has
a huge earning capacity, some lenders offer
step-down loan products. In this the rates are
huge during the initial year as the borrower can
easily afford high EMI repayments. As the years
roll by, the EMI installments come down.
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So before applying for the home loan study all
the factors requirement and financial position,
select a product that best suits your needs by
comparing home loan rates offered by various
Banks.
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Source http//indiahomeloan.blogspot.in/2007/11/c
hoose-home-loan-options-strategically.html
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