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02 August 2011

The Thumb Rule for Home Loans Basics of Home Loans for Intelligent Borrower


Home loans becoming easily available it is a sure way to get that dream home. Every individual dreams big and I know it is very good to be positive and ambitious regarding your future. So when you go for house hunting you are confident that your income being 35 thousand Indian Rupees will definitely go on increasing and as you move up the ladder you will be able to pay larger EMI(Equated Monthly Instalments). So you happily go in for a larger house as compared to other options and lenders are happy to provide you loan, they earn from high interest.
The journey of repaying the home loan begins with smaller EMIs and proceeds with increasing in amount. Many people opt for flexible rate of interest in the repayment schedule as they are confident about their increase in salary over the years. But it is better to take a informed decision than be sorry later. Reaping EMIs is a stressful task since this goes on for 10 to 20 years. Hence an intelligent borrower would research the market, search for rates of interest and go in for the best deal, the one which helps to save precious interest over the years.
Many lenders will allow you to take a home loan on 40% of your income. This income is not the total income on your salary slip. Deductions will have to be made regarding cuts on income tax, insurance and other investments. Here we consider the net income, that is disposable income , which you have in hand. It would be better to be on the safe side and take a loan approximately about 25 to 30% maximum of your income. However much you adjust the expenses this figure will allow you to make the repayment process of home loans passable and stress free.
I am not saying that you underestimate but dreaming in a practical manner will be better. Our early generations did dream big and hence now the property they have purchased has grown by many times. Keep it in a manageable amount and do accommodate for rises in income and position over the years. But take your own decision regarding the loan available, more so if you have a very good rise in salary you can invest the money in other profitable investments or adjust you EMI by changing your repayment schedule later on to accommodate a higher EMI.
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