6 Important Things to Consider Before Taking a Home Loan

Buying a home or a property is one of the most significant investment decisions you make in your life. Due to this reason, most people choose to take on a home loan that can ease the financial burden that comes with a serious purchase, the likes of buying a house.

When investing in a lifetime decision of this nature, it is essential to consider certain factors. It is best to understand what is involved in taking out a home loan and how much it will cost you in the long run. It is also vital to find the best option that can fulfil your housing loan requirement.

Things to consider before taking a home loan:

1. Do your research on all available housing loan options

It is best to do your research before applying for a home loan, as this helps you understand whether the loan is suitable for your requirements. In addition, it helps to find out more about the housing loan interest rates that are likely to be applied and what terms and conditions the lender has put in place. Different mortgage lenders present you with varying terms and conditions relative to their organizations; hence it’s worth keeping an eye on those when choosing your loan option.

Pay close attention to the eligibility criteria that may vary from organization to organization. It is also noteworthy that home loans provided by banking institutions require more documentation than other financial services.
In contrast to housing loans offered by banks, HNB FINANCE provides you with a simple and hassle-free process. If you are under 60 years of age with adequate repayment capacity, you can easily get yourself an HNB Finance housing loan by submitting your loan application along with the following components:

  • Employment and salary confirmation OR details of the business if self-employed
  • Registered Primary Mortgage over Residential Property
  • Two acceptable guarantors
  • 2. Find one that is affordable to you

    The organization you choose and the type of loan granted will determine your loan terms, such as how much you are required to pay over the lifetime of the loan and any fees or interest charges that are applied. When determining your eligibility for loan terms and interest rates, lenders will also look at your credit history and current payment history. Different organizations will present you with varying loan terms; hence, carefully read through the loan contract and note that all the interest rates are in place when choosing a home loan.

    Ensure that you factor in the cost of living in your area and regular payments you have to make, such as schooling costs and transportation. Selecting your housing location according to your financial situation can help you determine the best possible loan amount you should sign up for that is affordable to pay off.

    3. Be cautious of your spending habits

    When signing up for a home loan, it is crucial not to lose sight that your loan repayments will add to your monthly expenditure. It is advisable to follow a strict budget to ensure you can meet all your payments on time. You must spend with caution and take necessary precautions to control your outflow of income so that you would be able to pay off all your debts at the earliest.
    During the loan tenure, take all necessary steps to prevent deferred payments that can affect your personal credit and avoid making other significant investments until your existing loans are paid in full.

    4. Choose a suitable repayment tenure and instalment rate

    If you take out a home loan, it is vital to understand when and how much you can pay. The maximum amount that can be charged is what is called your “current obligation’. This limit may be different for each lender, and the terms and conditions may vary slightly. Still, with some understanding, you should be able to determine how much you can afford to pay overtime without risking default. Your monthly instalment rate will be dependent upon the repayment tenure your sign up for. The bigger the down payment you make, you would have lesser stress concerning your instalment rates.
    Opting for a longer tenure can provide you with smaller monthly instalments. However, this can affect the interest rates adversely, resulting in you paying a lot more in the long run solely through a high interest.

    5. Factor in any additional charges

    Apart from the monthly instalments, you may have to encounter other charges for administrative and processing purposes. Ensure to communicate these clearly with your lender before making your application to avoid any surprising bills coming your way to disrupt your planned expenses.
    If there are any service charges present, make sure to find out if they are one time or recurring payments. If there are any monthly charges, do factor them in when calculating your monthly budget during your financial planning.

    6. Be thorough with all necessary documentation

    Ensure you’re thorough with all the terms and conditions surrounding your home loan. Carefully read through all the documentation you sign and pay attention to the fine print that will dictate your terms in the future. Make a note of all penalties that can be imparted to you, as not all providers of easy home loans are forthright with this information.
    Make sure you understand the rules and regulations of the loan you’re applying for, how your debt will be paid off, and any other restrictions or requirements that may affect your ability to get approved for future loans.

    Why choose HNB FINANCE Home Loans

    Real estate is an investment, and like all investments, there are risks. The good news is that with proper research and preparation, you can minimize the risks and turn a profit. Before you take out a loan to buy your property, it’s essential to understand the process behind home buying and lending.

    You can minimize these risks and fulfil your lifelong dream of owning your personal space of zen by signing up for Nivahana – Housing Loans from HNB FINANCE.This facility enables you to take a loan up to LKR 10 million against a mortgage over an immovable property with a maximum repayment period of 10 years.

    Other benefits of the Nivahana Housing Loan scheme are the convenient doorstep services offered by HNB FINANCE in collecting documents and enabling quick processing of the loan with minimal documentation. Through this specialized loan facility, HNB Finance can provide you with the most convenient home loan facility to build, purchase or refurbish the home of your dreams.