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The Most Important Terminologies In A Housing Loan Glossary

By Author: Aishwarya Mahurkar
Total Articles: 291

Housing finance in India can be so overwhelming for first-time borrowers. But, take a little bit of time to understand this sector, its nuances, and its language. You will be able to understand and communicate as effortlessly as a pro. So, don’t dive into a housing finance sector without understanding these most important terminologies.


EMI:


This is a vital lifeline for every borrower. When you take a home loan, you guarantee the housing finance company, that you will pay a predetermined sum on a monthly basis. It is called as equated monthly installments (EMI). This is the most crucial aspect for a housing loan since you need to fit this amount into your monthly income.


Down payment:


Most people understand that borrowers have to take a partial responsibility of asset purchase. That is a non-negotiable part of a housing loan. Each housing finance company will ask for the small percentage of the cost of a property. It is known as a down payment. So, borrowers need to start saving when they decide to buy a property. They need to save up minimum 15% to 20% of the cost of a property. However, finance savvy people can choose to save more and ask for a lower home loan rate. Higher down payment is a gesture of a responsible borrower.


Repayment option


When a home loan EMI calculator calculates your EMI, it is a simple arithmetic. But, if your application is accepted, you have choices. One of the most important choices is repayment option. It can impact your house loan EMI without any major financial amendments. So, you can choose a step-up repayment option, so you can pay less initially and pay more later. This is ideal for youngsters. Balloon repayment option suits most businessmen. Well earning professionals in their 30s and 40s consider step down repayment option.


Credit score:


Credit score and credit history are a vital part of a house loan eligibility. Some housing companies consider it the definitive factor. A credit score is a numerical representative of your financial life. But, several aspects of your financial life are utilized to evaluate your behavior as a potential housing finance borrower. So, ask your relationship officer about the credit score limit for confirmation. You will need to take your own credit report in order to understand the current scenario and improve it if necessary.


You may need to familiarize yourself with more terms for understanding housing finance in India. But, this is a great start in a direction of your dream home. Enjoy.

Author Bio :

Aishwarya Mahurkar is an experienced writer concerning the finance industry. Her articles help in informing her readers of the Home loan and the home loan EMI calculator.

Total Views: 53Word Count: 451See All articles From Author

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