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Know These Terms Before Applying For A Home Loan

When you are making an important financial decision in life like, buying a home, take it after a due diligence, backed by research and planning. Check the must to know terms before applying for a home loan.

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Know These Terms Before Applying For A Home Loan

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  1. ​​​​Know​​​​These​​​​Terms​​​​Before​​​​Applying​​​​For​​​​A​​​​Home​​​​Loan ​​​​Know​​​​These​​​​Terms​​​​Before​​​​Applying​​​​For​​​​A​​​​Home​​​​Loan  When you are making an important ​financial decision in life like, buying a home, take it after a due diligence, backed by research and planning. Check the must to know               terms​​before​​applying​​for​​a​​home​​loan.                                                    Down​​​​payment:   If the amount that the buyer has to pay from his or her pocket, which will not be                   sanctioned by the bank. Bank sanctions only 80% of the property value and the rest             20%​​should​​be​​paid​​by​​the​​buyer.                                      Rate​​​​of​​​​interest,​​​​types:   Two types of interest rates are fixed rate or floating rate. In fixed rate type, your               interest remains fixed for the entire loan-period, whereas the floating rate varies             according to the market conditions. So one pays an unchanged rate of interest with             the​​fixed​​rate.​​Floating​​rate​​allows​​you​​to​​pay​​less​​at​​times​​where​​markets​​fluctuate.                                                Sanction​​​​letter:   It is the confirmation for the eligibility of the home loan, but does not guarantee               disbursement. The letter will have loan amount, loan period, interest rate, EMI             (equated​​monthly​​income)​​amount,​​etc.                             

  2. Disbursement​​​​modes:   After the verification of the legal documents, the loan amount would be released in             three ways or modes: full, partial and advance. When the total loan amount is               released, it is called full disbursement. In case of the partial disbursement, the loan               amount​​is​​released​​in​​parts​​according​​to​​the​​progress​​in​​construction.                                              EMI:  Repayment of the loan to the bank on monthly-basis is called EMI. It depends on the                 principal amount, interest rate, compounding interest, etc. EMIs begin after the loan         disbursal.​​It​​is​​inversely​​proportional​​to​​the​​loan​​tenure.                                  Post-dated​​​​cheques​​​​(PDC):  The borrower has to issue PDCs for a stipulated period for the EMI payments at the                 time of final disbursement. These are collected as one may need to pay extra EMI             with​​the​​extension​​of​​the​​project.                                    If you are applying for a home loan for the first time chances are that ​you may encounter a few problems​. Get a thorough knowledge about the terms, policies,             procedures, etc. before applying for a home loan to take well-informed decisions. For             more information and expert advice on personal finance, approach ​ArthaYantra - World’s​​full-service​​Robo-advisory.                                                                                     

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