If you’re looking to purchase your own home, you might be wondering about the best way to go about financing the purchase. You could choose to take out an expensive private loan, apply for government assistance in the form of a grant or get help from family and friends. The reality, however, is that most people don’t have that option available to them and so have to rely on financial institutions and banks when it comes time to secure a loan for buying their home.
Overview
Buying your first home is likely one of life’s biggest milestones. Before you do, though, there are a number of things to consider—from how much money you can afford to spend on a mortgage to how much maintenance and improvement costs will be. This checklist gives you an overview of what factors should play into your decision when selecting your SBI home loan.
Interest rate
The interest rate you can expect to pay on your home loan. Usually, SBI home loans have fixed rates that vary according to criteria such as your financial profile and credit history. If you are considering an adjustable-rate mortgage (ARM), which tends to offer lower initial rates than fixed-rate loans, make sure you can stomach potential future interest rate hikes—and that you understand all of your options before making a decision.
Prepayment options
Before applying for a loan, you may want to consider your options when it comes to prepaying it. You may be able to gain access to better interest rates if you select an adjustable-rate mortgage (ARM) that allows you to pay more than your scheduled monthly payment or if you have access to another source of cash, such as funds from family or retirement.
Repayment flexibility
SBI Personal loans are flexible in terms of tenure. From 1 year to up to 20 years, your loan repayment schedule can be customized based on your cash flow needs and ability to repay. The loan payment can also be split into more than one installment if you need to spread out your debt servicing cost over a longer period of time. Because it is an unsecured personal loan, you don’t have to worry about repaying on any collateral property or facing foreclosure proceedings if things go wrong.
LTV/CLTV/DTI limits
In short, LTV/CLTV/DTI stands for Loan-to-Value (LTV), Combined Loan-to-Value (CLTV) and Debt-to-Income Ratio (DTI). These are three lending guidelines that are used by lenders to ensure that borrowers will be able to repay their loans, as they did not only get into debt but also secured their property with collateral.
Processing fee
SBI charges 4% of your outstanding balance as a processing fee. If you get an installment loan, SBI will collect monthly interest at 12%, but you will have to repay only 92% of your outstanding balance during each cycle. To make it easier, SBI waives off processing fees if you repay your loan before 30 days. So make sure that you repay your home loan well before 30 days if you don’t want to shell out any processing fees.
Choosing a home loan can be daunting and confusing. However, you don’t have to get lost in all of these details alone. At State Bank of India (SBI), you can choose from two innovative home loans that offer features that are ideal for today’s Indian family. Whether you are looking to purchase your first home or want to upgrade your current house, SBI personal loans or home loan options will help make getting that new house as stress-free as possible.
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