Compare Home Loans

By: EconomyWatch Content   Date: 14 December 2009

About The Author

EconomyWatch Content

Follow The Money

EconomyWatch, Content Team

 

  • Dot Div
  •      

Home loan products are available in different versions and through a range of lenders. As home purchase is probably an individual’s biggest investment, it is essential to compare home loans.

 

Compare Home Loans: Interest Rates

Interest rate is the most decisive factor to compare home loans. Lending institutions offers two different types of interest rate schemes, which are:

 

  • Fixed interest rate
  • Floating interest rate or adjustable interest rates

 

A fixed home loan allows an individual to lock in a specific interest rate for the entire loan term. Fixed interest rate is based on the prime lending rate at the time of purchase of the loan. Here the interest rate is independent of market fragility in the course of the loan term. If the home loan interest rate bumps up in future, the borrower can enjoy locking a good deal but s/he may face loss if the interest rates slash down.

 

A floating home loan is a variable interest rate mortgage. Here, the interest rate for every month differs as per the change in prime lending rate. Then, the borrower has to pay more if the interest rates soar. However, s/he remains in profit if the interest rates decline.

 

Both the options have specific pros and cons. This way, it is up to the consumer’s understanding of market forces to decide whether to opt for fixed or floating rates. However, some banks offer a mix of both the schemes. Here, an individual can switch from fixed to floating rates and vice versa as per laid conditions.

Compare Home Loans: Additional Criteria

Here is a list of additional benchmarks which one should consider to compare home loans:

 

  • Amortization: It is the repayment period for a loan.
  • Eligibility: Not all the lenders provide home loan to every potential borrower. Check the eligibility criteria set up by the lender to advance loan products.
  • Loan amount: Based on your source of income, check the loan amount for which you can qualify. Banks have different loan advancement policies, so qualifying loan amount differs among different lenders.
  • Documentation: Lenders require certain documents as identity, address and income proofs. Keep all the documents ready.  
  • Tax benefits: In some regions, loan repayments are included in tax deductibles.

 

Since most of the individuals may not be familiar with financial jargon, it is advisable to seek advice from a broker or financial expert.


  • Dot Div
  •      

Most Popular in Home Loans

Related Links
blog comments powered by Disqus