Everything you need to know about building your dream home

As middle class people, one of the biggest dreams we have in our life is to buy our own home. Purchasing a home is one of the biggest financial decisions we ever make in life. But our average savings make it impossible to purchase a home worth several lakhs or crores. Thankfully, banks come to our rescue by offering home loans. Taking a Bank of Baroda Home loan, or a loan from any other bank offering great interest rates, can help us take a step closer to fulfilling our dream of becoming a home owner. Here is everything you need to know about building your dream home.

Begin by determining your budget: Your budget can help you decide whether to purchase an under-construction property or a constructed one. After you arrive at a budget and decide the kind of property to wish to purchase (a 3BHK flat for instance), you need to find the funds to purchase the property. You have to dig into your savings to pay for the down-payment on the home. You can arrange the rest of the finance by applying for a home loan.

Find the right home loan: It is important to research the interest rates and tenures of different lenders before you apply for home loan. Remember that you will be paying EMIs on your loan for several years together so you should ensure that you check with different banks and choose one which offers the lowest interest rates. Also remember to compare additional charges on your loan such as foreclosure charges, processing charges and so on.

Determine your total loan amount: Most banks in India provide 80% -85% of the home cost as the loan amount. This means you have to arrange the remainder amount of 15%-20% to make the down payment. Furthermore, you have to bear the additional loan processing charges, stamp duty charges etc., apart from the down payment amount. This is why you need to start you planning early.

Choose the right interest rate: You have to choose between a fixed and a floating interest rate on your loan. It is necessary to understand the difference between the two as your interest rate directly impacts your EMIs. A fixed housing loan interest rate is one in which the EMIs do not vary over the loan tenure and is thus beneficial if the interest rates rise in the future. The floating interest rates change with time and can also prove beneficial when interest rates on home loans fall in future. Floating interest rates change continuously as per market fluctuations.

Ensure you read the loan document: This is the last step. Before you finalize the housing loan deal with your lender, ensure you understand all the terms and conditions of the loan. Be aware of all the regulations associated with settlement, prepayment, foreclosure etc. Read the property document carefully and understand the various applicable charges.


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