Everything You Need To Know About Home Loans
When you walk past a beautiful building, a moment comes when you feel like owning a home just like that one or even better. You calculate in your head about your bank account savings and your expenditure. Then it hits you. Even if you borrow money from family members or use your personal wealth, it still may not be enough to buy an apartment. As more people fill the urban space, the need for more apartments has increased, and the prices have soared. If you are considering buying an apartment, you should apply for a home loan.
Find Out Your Eligibility
In Bangladesh, both banks and non-bank financial institutions (NBFI) offer customized loan options for those seeking to buy a home.
To check your credibility and eligibility, they will ask you to submit a couple of documents apart from the main application form. Based on your job status, capability and income range, they will provide you a long-term plan on how to return the money with interest. You need to be of a certain age and show some degree of financial stability to get a loan disbursement. Also, banks and NBFIs will not lend you the entire amount. There is a limit of up to 70%, which depends on the total value of the property and how much of the down payment you have already paid.
Prepare Necessary Documents
Loan amounts may differ from one institution to another, but regardless of that there are some ground rules. Make sure you have these basic documents ready when applying for a home loan:
- – Most recent bank statement spanning the last one year.
- – Tax Clearance Certificate
- – NID or Passport copies of yourself and your nominee
- – Nominee’s credentials
- – Utility bill copy
- – Deed of Agreement of the apartment
- – RAJUK approval proof
- – Booking and legal documents of the apartment
- – Registration copy if applicable
If you are someone with a monthly salary, you must provide a salary statement of one year. If you are a business person, you must submit a trade license for the last three years, bank statement of your company in the last year, Certificate of Incorporation, and Registered Partnership Deed if you have a partner company. Self-employed individuals such as doctors and architects must show proof of a professional degree and proof of belonging to a professional organization. They must add a declaration on a self-pad with their seal.
Once everything is verified, loan approval may take a week. Remember that if you have poor credit records or unpaid loans, chances are that your application will be rejected.
Factors to Consider Before Applying
Take your time when it comes to home loans. The first thing that you would want to consider is the interest rate, which depends on the tenure and amount of the loan, as well as market situations. Do your research and find out where you will get the lowest interest rate.
Find out whether the interest rate is fixed in the loan facility you opted. Usually, it is fixed, but sometimes lenders do provide floating rates depending on the market fluctuation. Such flexibility might be advantageous if the interest rate decreases, but it could be worse if market rates increase. Lenders also change rates, provide discounts or other offers if you pay back faster or pay a large amount at once.
Lastly, talk to lenders about hidden charges. They often take loan processing fees, partial payment fees, early adjustment fees, and penalty charges, etc. If it seems excessive, you can avoid the lender. If you have already chosen the lender, you can credit transfer to other lenders with better offerings. Credit transfer is available in many lender organizations.
Acquiring a home loan is a lengthy process but worth the hassle because it carries a low risk, especially if you have a fixed or combined income from the household. Your income tax liability also reduces because you will pay monthly installments, plus investing in real estate nowadays is generally profitable. It has become a widely popular choice among apartment buyers in Dhaka. Some real estate companies offer their own installment and loan plans with reduced interest rates. Find out what they are offering. Make a thorough and informed decision when applying for a home loan, because it is a huge financial investment in the long run.