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Loan- The Important Part of Our Lives

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by: No more debt !
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Date: Sun, 29 Mar 2015 Time: 9:34 PM

Availing a home loan is a tedious task to be done than said. It seems that getting more and more customers is beneficial for the banks but it is not as easy as we think. Getting a loan sanctioned is one of the cumbersome tasks. As it is the nature of financial products that they come up to avoid the nasty surprises, so is the case of home loan. You should be perfectly acquainted with the upcoming vicious surprises. Before signing that dotted line, devote some time to know the important things related to product.

Factors Influencing Your Eligibility

The simplest way to get measure your eligibility is to calculate the EMI that you can afford. EMI is limited to 40-50% of your monthly income. It is calculated considering the basic salary, allowances and reimbursements are not included in this. Number of dependents, liabilities to another loan and age are the major factors that affect your eligibility. Moreover, your income stability is also a major factor to be considered. A salaried individual gets loan approval easier rather than a self employed individual.

Your Loan Type

Categorized on the basis of rate of interests, there are two types of loans- fixed and floating. Fixed rate does not change with market fluctuations whereas floating rate gets impacted with the market conditions. Fixed rate is generally 1-2.5% higher than floating rate.

Fine Print of Agreement

Home loan agreement document is incomprehensible and a legal document. It is suggested to go through it thoroughly as it may hide some devils. According to an individual a ‘default' is generally defined as a borrower who does not pay EMI. There are some banks that call off a borrower as ‘default' if he gets expired, become divorcee (in case of joint loan account) or gets indulged in criminal offence or crime litigation.

Sometimes there is a security clause as well that warrants the bank to demand additional security along with amount of loan. It is for the security purpose in case if property price goes down.    

Longer Tenure, Costlier Loan

Reserve Bank of India seems to be hawkish referring to its monetary policy. Higher base rate implies higher EMI in case of floating rate. Many cannot afford such huge amounts of EMI so they ask the bank to increase the tenure. It may give you temporary relief but actually you end up paying more in long term.

Paying attention to the above points will help you to smoothen your financial ways. Recently SBI bank has been accolade with the award of ‘Most Preferred Loan Provider' by helping the financially starved people. You can check your emi by SBI Loan Calculator. SBI Loan products are available at attractive interest rates with special schemes for females.

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Loan- The Important Part of Our Lives

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