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How to Choose Home Loan in Simple Steps [Guide 2025]
Buying a home is a big step in one’s life and the most important one too. It is a well thought out decision that How to Choose Home Loan , as property investments are one of the biggest investments of one’s lifetime. A home loan is usually available to construct a home, buy an already constructed housing property, renovate an existing home, or construct a home on a piece of land you own.
Once you have finalized a home, estimated your costs, it is time to choose your lender. Finances involving lump sum need to be scrutinized with the best finance provider along with several factors. Choose the suitable home loan for you considering factors like eligibility, Loan-to-Value (LTV), interest rates, etc. So, here’s a guide to choose a home loan in simple steps to ensure that you get a good deal throughout your loan tenure.
Compare Home Loans
Market research is imperative for huge investments with longer tenure. Choosing the lender is the most important step in a home loan. Search multiple vendors and their competitive offers and zero down the trustworthiness of all suitable for your requirements. Do not apply for multiple loans in advance, as it will influence your CIBIL scores and eventually lead to rejection. Check your lenders online portal to learn the offers to arrive at a decision.
Check Your Credit Scores
Lenders offer good interest rates if your credit scores are good. The borrower’s application may be considered if CIBIL score is 700 and above. These scores determine if you have been repaying your previous loans including credit card bills on time. Borrowers with impressive credit scores are usually sanctioned home loans with cheaper interest rates, subject to other criteria. Hence it is imperative to monitor and improve your credit scores in advance to secure more affordable loans.
Finalize the Rate of Interest
Home loan interest rates can be availed as fixed-rate or floating rates. As the name signifies, fixed interest rates do not change throughout the loan tenure and are higher than floating interest rates. The floating interest rates start with low-interest rates and are subject to change based on the market or an index over a duration. It could be less than the fixed-rate or shoot more than the fixed-rate of interest. Hence it is imperative to calculate the convenience.
Check Your Eligibility Online
The first criteria are to know your eligibility and the loan amount sanctioned. The loan amount is granted at 80 to 90% property value, but it depends on your lender as well as your eligibility. The rest of the amount will have to be furnished by you. Hence, it is imperative to know how much LTV you may be able to get. Additionally, your home loan eligibility depends on your monthly income, repayment capacity, age, property value and more. You can get an estimate of your loan eligibility in advance using the home loan eligibility calculator to avoid problems in later stages.
Check for Prepayment Charges
Prepayment is an excellent option to lower your interest rates with time. Most banks and NBFCs do not charge prepayment charges after the RBI circular on floating interest rates. However, lenders charge prepayment charges for fixed interest rates. Hence it is imperative to calculate the prepayment charges offered by your lender before you seal the deal.
Calculate Your EMI With a Home Loan EMI Calculator
You can use an Home Loan EMI calculator to calculate your monthly instalments. Calculating your instalments in advance will give you an estimate to plan your finances accordingly. To understand your money flow better, you can choose the comfortable EMI payment and the tenure you wish to repay.
The EMI calculator will ask few basic details like:
- Loan amount (please do not include the down payment amount here)
- Tenure
- Rate of interest
To calculate your monthly instalment amount, you can adjust the sliders provided in the calculator to show you the instalment rates based on the other factors. It will help you customize your instalment rates and tenure. Check your loan provider’s website to understand the approximate charges and compare it with competitors to get your best deal, which matches your requirements.
Read The Fine Print
Many lenders promise instant approvals and other incentives to close the deal quickly, especially when the borrower profile is good. Rushing into a home loan will lock you. Consider other lenders and understand the fine print mentioning interest rates and other criteria before signing the deal.
Fullerton India’s Grihashakti home loans offer attractive home loan interest rates, and loan amounts up to INR 5 cores based on eligibility, and flexible repayment terms. By following the recommendations above help for How to Choose Home Loan, you can be confident of your financial health and that you will be able to manage a house loan without hassle!