We all know that taking a loan is always like a mammoth task. No wonder this is perhaps the most cumbersome legal work ever required when buying a 1BHK flat in Pailan. With all paper works and legal formalities, homebuyers feel tired and they tend to make mistakes as well. It has been noticed that the first time customers face a huge number of problems with the loan jargons. In fact, this leads to massive issues when dealing with real estate developers and bank officials.
True, taking a home loan is never an easy task and there are many financial liabilities, which one has to take care of. However, if you want to avoid problems, make sure you are familiar with the related jargons and common practices. No wonder this practice will help you take a home loan without any added tension. Some of the popular home loan jargons and practices you must be aware of are as follows:
Equated Monthly Instalments or EMIs
EMI or equated monthly instalments are the reimbursements made to your lender every month. It is, in fact, an unequal combination of your interest payments and principal repayment. As per the thumb rule, the equated monthly instalments must not go beyond 30% of your total revenue, considering all other liabilities.
EMI payments start as soon as the home loan gets disbursed. There will be an amortization schedule with your EMI break up on the entire home loan term. Keep a track on this, so that you do not miss out any changes in the loan tenure or interest rate made by your bank.
It is seen that several builders/developers get their projects pre-approved by the lending institutions. To be precise, a pre-approved property/home means that the concerned bank or the financial institution has verified all technical and legal documents of the residential project, thereby, finding them in place. This means that any buyer, who applies for a loan, need not require getting the legal authentication done again.
Sanction Letter or Offer Letter
A sanction letter is nothing but an official authorization coming from the bank or financial institution that has acknowledged you as a reliable loan customer. However, this initial step does not confirm the sanction of your home loan. After all, the verification of the legal documents is done, only then the home loan will be disbursed. Generally, the validity of an offer/sanction letter is around six months. If you are unable to avail the loan during this particular period, then automatically the sanction drops and the whole process requires to be reworked.
Administrative & Processing Fee
You must be aware of the fact that every financial property charges an administrative and processing fee in order to process your home loan documentation. They say that the fee usually ranges from 0.5%-2% of the loan amount. It might look like a small percentage to you, but you never know it can add considerable weight to the home loan rates.
When you are buying a 1BHK flat in Pailan, you will find that several banks offer certain schemes in which they waive off the processing fee, thereby, attracting more customers. Therefore, when you are selecting a bank, do opt for the one that offers the lowest/ non-processing administrative and processing fee.