Home Loan Checklist

• Many property deals in India comprise an unaccounted-for money component. No bank will agree to finance this component.
• If you are planning to purchase a resale property, bear in mind that you will not get a loan for a term which exceeds the expected remaining life of the structure.
• Evaluate as many lenders as possible before finalising on one. Increased competition among banks has made it possible to negotiate on both interest rates and processing fees.
• Some properties are pre-approved for loans by banks. This means that the bank is satisfied with the legal validity and viability of the project. Consequently, if you decide to buy such a property, the bank will have to spend much less time on processing your loan application and hence your loan can be sanctioned faster and since the bank has already done the necessary checks, you can get clear title to the property.

You should be cautious while opting for a home loan. Here are a few pointers:

• Floating rates can increase
  An increase in the floating rate of interest may result in increase in the tenure of your loan or in the EMI value.
• Fixed interest rates may also change after some years
  These rates are not constant over the entire loan term and face the same risk as floating rates due to the long tenure of the loan.
• Salaries may not increase as expected
  One may go in for a higher quantum of loan with the expectation of an increase in future earnings, which may not materialise
• Tax benefits may change
  Currently home loans enjoy a lot of tax benefits in India, which are subject to change every year. This might have implications due to the long tenure of the loan.
• Either spouse may stop earning
  If the loan has been taken keeping in mind the earning capacity of both spouses, the repayment capability may be hit if either spouse stops earning.
• Children and other responsibilities
  The repayment capability of an individual may be hit due to an increase in expenditures because of additional responsibilities.