Home Loans. Aren’t these the biggest financial commitments most of us make in our work-life years? The big-ticket amount and requirement of long tenures to repay the EMIs is what anchors a major part of our earning years; all of it aimed to realize the goal of owning a home with the help of Bank of Baroda Home Loan.
But despite having the helping hand of home loans, there’s this need for a well thought financial roadmap when planning, applying and repaying the big-ticket home loans. Remember, failure to do so can have adverse implications on your financial life for the long term. So, here is a one-stop guide to understand and follow when submitting your home loan application, especially when you are getting a low and lucrative Bank of Baroda Home Loan Interest rate, just like in the present scenario.
Do not ignore the interest rate type- As the calculation of Bank of Baroda Home Loan EMI Calculator is primarily dependent on the interest rate, you should wisely decide the type of interest rate which you are about to take for your home loan. Factor in the current and expected economic scenario and your risk appetite. There is fixed, floating and hybrid/mixed rate.
You should go for home loans with a fixed rate if you are comfortable with the fixed EMI you are committing to pay and do not want the headache of rate and EMI going up or down. This can be helpful even in cases where interest rates are expected to rise in the near future or if interest rates have come down recently and you wish to finalize that rate. At the same time, those who aren’t much concerned about all this or expect a downfall in rates can go for floating rates.
You can even take a combination of fixed and floating rates may also be opted for, & you can switch without any hassles from one to another by paying a nominal fee and if your lender offers this facility.
Try opting for a lower LTV ratio – This ratio is the proportion of your property’s value which you get in the form of a Bank of Baroda Home Loan. For example-The cost of your home to be purchased is Rs.75 lakhs, and the loan which the bank/HFC grants are Rs.50 lakhs. Here, the LTV ratio would be Rs. (50 lakhs/75 lakhs)*100, which comes out at about 67%, hence the rest of the margin of 33% of the property value has to be borne by you from your pocket, along with other fees like processing fee.
Always remember, a higher LTV implies that a lower proportion of the value would be payable by the borrower and vice versa. Also, the LTV ratio is dependent upon your credit profile, repayment capacity, etc., besides the current market value of the property.
Act wisely during tenure selection- The decision to choose the repayment tenure of your home loan from Bank of Baroda Home Loan has to be a well thought one. The tenure should be chosen very carefully since your EMIs are directly dependent on the choice of your loan tenure. Generally, lenders offer tenure of up to 20 years- 30 years. And for most borrowers who believe the misconception that the longest tenure can be the most suitable one due to lower EMI amounts, it’s important to know that the longer your tenure is, the more interest outgo is there, given that you pay the same interest rate for a longer period.
Hence it is always advisable & recommended to use the EMI calculator tool available online to estimate your EMIs across different tenures, as per the Bank of Baroda Home Loan Interest rate, which anchors the interest component based on your loan amount and applicable interest rate.
Have a look at your EMI to income ratio- We all know that home loans tend to involve a large sum, thereby requiring you to carefully have a look at your financial position, i.e. income and expenditures, in order to assess repayment capacity. This will help you know whether the expected home loan EMIs would be affordable, especially without any sort of burden on your monthly financial obligations. To assess that, check your EMI to income ratio, which is the proportion of your net/gross monthly income which is being utilized towards EMI repayments. Ensure that your EMI to income ratio does not exceed the range of around 50% in order to get a smooth approval of a home loan.
Check lender’s home loan eligibility criterion- Thanks to the availability of online tools in the form of a home loan eligibility calculator, it has become easier for prospective homebuyers who wish to become home loan borrowers to know whether they are eligible for the Bank of Baroda Home Loan or not.
Hence, why not utilize this online tool to check your eligibility for the home loan, which is dependent on multiple factors like your present and expected age at the end of loan tenure, net monthly income, EMI to income ratio, etc. And, in order to avoid rejection of your home loan application or getting stuck in a situation where you have to pay a higher Bank of Baroda Home Loan Interest rate, it is better to use the eligibility calculator of the particular bank/HFC.
Possess a high credit score- All lenders, including banks and HFCs, tend to mostly approve loans more smoothly to those with a good credit score, as it depicts good payment history, financial discipline and higher creditworthiness. Usually, those with a credit score of around 750 and above stand a higher chance of easy Bank of Baroda Home Loan approval.
Remember that you can conveniently check your credit score and then if required, take the required steps on how to improve it further to the level of 750 and above. However, in case you do not have a credit score or have a low credit score, you may get the home loan approved due to their secured nature, but note that the applicable interest rate would usually be on the higher side when compared to those offered to borrowers with a good credit score.
Compare lenders on multiple parameters- As home loans are a life-changing decision, you should finalize the suitable lender after a thorough comparison amongst the various banks like Bank of Baroda Home Loan and HFCs. Ensure to compare them on parameters like interest rates, processing fee, prepayment charges etc., before you zero in on one lender.
Moreover, even after you have taken the home loan at the applicable Bank of Baroda Home Loan Interest rate, you should not fail to keep an eye on other lenders’ rates so that you have the doors open for a home loan balance transfer.
Know the total cost of availing home loan- It is wise enough to calculate the total cost of your home loan and not just the EMI or interest rate. The total cost of your loan would not just include the heavy component of the Bank of Baroda Home Loan Interest rate, but also the processing fee, EMI, legal fee, documentation fee, administrative fee etc. The knowledge of total cost in prior gives you a clear picture regarding your financial obligations and prevents any unexpected burden through various charges levied.
