5 Home Loan Terms You Should Know Before Taking Home Loan
Nowadays, home loans have made purchasing our dream home very easy. We do not need waiting for some years to save enough amounts to buy a new home. If you want to take a home loan, you can purchase as many new houses as you want and repay the loan amount as monthly EMI.
Here, we have mentioned some important details about the top 5 home loan terms which are as follows.
Margin or Down Payment
Nowadays, when purchasing a property, bank approval in the form of home loan is 75 – 85% of the value of your property. The remaining amount is to be arranged by you. If you have decided to purchase a new home of INR 20 lac and the bank approves an amount of INR 15 lac as a home loan. And the remaining INR 5 lac rupees, which you have to require arranging yourself, is known as margin or down payment.
EMI
Generally, EMI is known as Equated Monthly Installments. And it is the monthly amount that you pay to the bank in order to repay your loan. This is pre-calculated by the borrower before taking a home loan. Nowadays, EMI is calculated based on the applicable rate of interest (ROI), tenure and the amount borrowed.
Credit Appraisal
At the present time, banks ensure the repaying power of the borrower by several parameters before sanctioning a home loan. These include age, income, employer, savings, liabilities, assets, and other details to avoid the possibility of default. Thus, the procedure of ensuring repayment power or capacity is known as credit appraisal.
Collateral or Security
Sometimes banks require security or collateral which is a property to ensure repayment capability. Generally, this property will be used to recover the loan amount in any default case.
Resale
The resale term is very used in the context of the many homes that were previously owned by one party and are not purchased directly from any builders.