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5 Golden Tips for the First-time Home Buyers

2021-06-09
3 Min Read
Author - Sanyam Jain
5 Golden Tips for the First-time Home Buyers
495 views

All of us wish to have our own home. The comfort, the happiness and the sheer satisfaction that owning our house give us is unmatchable. But what if you are buying a home for the first time?

Well, you have come to the right place. In this blog, I will be giving you the 5 Golden Tips (especially for first-time homebuyers) that will surely help you in saving a huge amount of money.

While deciding to take a home loan, numerous questions pop up in our mind, like, What kind of loan is the most suitable? Which lending institution is better? What should be the amount of loan to be taken? What should be its tenure? What do the market conditions suggest? and so on.

Among these financial commitments, EMI (Equated Monthly Installments) is one of the most important one.

The interest rate and the tenure of repayment of the loan amount are the major determinants of these EMIs and these two factors decide the kind of burden that falls on your shoulders every time the EMI is due.

Now, how will you feel if I tell you that you can reduce your home loan EMI burden to quite some extent by following just a few steps?

I guess we both know the answer to that. Let us see how:

Comparing the rate of interest:

First and foremost, it is really necessary to study the market and find out the best option that is available. In order to do so, one must compare the interest rates of various lending institutions online, and see which one of them is charging the lowest rates.

Compare Home Loan Interest Rates

Co-borrowing:

Female borrowers are allowed the lowest interest rates. Mostly, home buyers co-borrow with a female companion, (mostly it is a case of husband-wife) in order to cash in this lower interest rate.This is a great way to save a lot of money.

Negotiating the rate of interest:

Although the minimum and the maximum range of interest rate is already defined by the lender, it is not fixed, there is still a scope of negotiation there. You can get a better interest rate by negotiating with the lender. Higher the eligibility, the higher the chances for negotiation. You can easily increase your eligibility by adding a co-borrower and by showing the combined income of yours along with the co-borrower.

Opting for a longer tenure:

The amount of home loan is a very big amount and hence the financial burden is immense. In such a case, the longer the tenure, the lesser is the EMI burden. While choosing a longer tenure reduces the EMI, it leads to higher interest cost, on the other hand, a shorter tenure would lead to lower interest cost, but in this case, the EMI will be bigger.

A longer home tenure usually increases the chances of getting the home loan approved by manifolds due to the higher EMI affordability of the borrower.

Loan-to-value (LTV) ratio:

LTV ratio refers to the percentage value of the property that is to be financed via the home loan.In the case of a home loan, the full amount is never financed by the institutions, the range for the same is 75% to 90%. The rest of the amount is to be arranged by the borrower on their own.

Now, it is advisable to opt for a lower LTV ratio because it rescues the home loan amount, which in turn, lowers the EMI and the interest costs. One should always try to make a higher down payment so that the burden is not too much in the future during the repayment.

Another advantage of opting for lower LTV ratio is that, since the amount is comparatively lesser, the credit risk of the lender is also less, and hence it generally motivates the lender to charge a lower interest rate which further helps in the reduction of interest rate and the EMI burden.

To sum it up, before you settle on a particular lender, you must ensure that you are getting the best deal possible. Study the market, compare the interest rates of different lending institutions along with the kind of procedure they follow, in order to save your time and resources in the future. Along with this, make sure that you have selected the right property. Sub-prime property typically has a higher rate. Also, try and maintain a high credit score to ensure your loan application is approved and processed at the earliest.

You can apply for a home loan online and can also check and compare the rates.

About Author

Sanyam Jain
Highly motivated and utterly skilled, a young and zealous writer trying to follow his passion for the love of English language.An actor, a singer and above all a writer, has written over 500 poems till date and wishes to publish his own works soon. With an experience of almost three years in content writing, Sanyam is working as an integral part of the content team at MyLoanCare.

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