Gone are the days when home loans were a conventional financial instrument that provided money for house construction or purchase. Today, home loans come in various shapes and sizes. They are diverse, prompting the need for education and knowledge.

This article simplifies the apparently complex task of home loan selection. Read on to know things, such as documents required for a home loan, you should check before availing a loan.

Home Loan Interest Rate and Eligibility

Home loan interest rateis typically lower than other loans. A home loan’s interest rate depends on several factors, such as borrowers’ credit profile, income, age, nature of employment, relationship with the lender, house valuation, and market rates. Lenders prefer application from borrowers with a credit score above 750. However, you may still apply for a home loan if your credit score is below 750, albeit at a higher rate. Hence, before submitting the documents or even signing documents online it’s really required for a home loan, you need to check and improve your eligibility for the loan.

Home Loan Amount

The loan amount of a home loan depends on your eligibility. Generally, lenders approve a loan amount of up to 90% of the house you wish to purchase or construct. However, the higher the loan amount, the higher the EMIs. If you want to keep your EMIs low, it is better to make a higher down payment. For example, if you make a 30% down payment, the loan amount will be 70% of the property value, and hence the EMIs will also be lower. Hence before submitting the documents required for a home loan, you should check the loan amount so that the EMI amount is within your limits.

Home Loan Repayment Term

The maximum home loan repayment term is generally thirty years. The longer the loan term, the lower the EMIs. However, when you select a long term, your credit score increases slowly, and you remain a debtor until the loan amount is repaid in full. Hence, before applying for a home loan and submitting the documents required, you should check your repayment capability and select a shorter term if you can afford the extra cost. A short term home loan not only lowers the interest ratesbut also enables you to shrug off the debtor tag earlier.

Home Loan Foreclosure Fees

Foreclosure or closing your loan before the term ends can be advantageous for a borrower. If you pay a lump sum over the EMI amount for settling the principal component of a home loan, it can reduce the subsequent EMIs and interest rate. However, your actual savings due to prepayment depends on the foreclosure fee your lender levies. If your lender has high foreclosure charges, the effective saving will come down. Hence, before handing over the documents required for a home loan to your lender, you need to check various charges, such as foreclosure fee, levied by the lender and select the lender offering the lowest fees.


While the tips mentioned above can help you select an appropriate home loan, it is ultimately the lender who decides your satisfaction with the loan. A home loan is more than the interest rate. The best lender is the one who gives industry-best interest rates and other benefits like less number of documents required for a home loan, flexible eligibility, simple application process, and long loan term.