Wednesday, November 21, 2012

How to Negotiate the Best Deal

Taking a home loan is a very convenient proposition for the people who want to buy the home for themselves. The government encourages credit off take in the form of property loans and, though the banks have their own set of eligibility criteria for giving these away, there is no disputing the fact that the many people have found their dreams of owning a home in a upcoming project like BPTP Princess Park come true by availing the home loan facility. Here are some tips on preparing yourself financially for taking home loans.

If the need is for owning a home and not to pay the rentals, then the obvious choice is to opt for home loan which would have a dedicated EMI, equivalent or more than the monthly rental. If you are taking the home loan with a perspective that the amount which you are spending in rents will go to the funding of your own home, then you shall ideally check out EMI-Rent gap, in case the EMI is more, you need to consider how would you raise the additional sums? With stagnation in rental rates and the increase in EMIs rates, this gap difference is increasing and the people shall take notice of it, if owning a home is not a primary task.
Secondly, there is also a need to keep EMI of some months as back-up. Ideally, the minimum back-up shall be of 3 months. This cushion is required in case there is a loss of employment or income. It provides safety for the intervening period till the time alternative arrangements are made.

Thirdly, most of the projects are financed at about 85 percent of their costs, requiring an initial down payment of about 15 per cent from the buyer. However, you can opt to make the more or less down payment depending on whether you can pay without any financial issues or not. Further, for arranging the down payment, you shall be prudent to use those savings which are giving you less returns.

Fourthly, you shall be prudent to take the loan, within the reasonable limits of what your take home salary is. Ideally, one-third of the salary component is considered to be feasible for paying the EMIs. Therefore, the loan shall be taken of that sum and for that term, at a particular rate of interest, that is equivalent to this component of the take home salary. There is no rule of thumb and the general rule is that the measure of loan shall be such that its EMI for residential units at the BPTP Princess Park Faridabad can be paid easily for years to come as the usual loan tenure is close to 10-15 years.

While taking home loan can be easy, it is better to be prudent in taking the loan and weigh all financial aspects clearly. It is better to be conservative and extremely rationale and the decision shall not be based on flimsy or highly ambitious grounds which can lead to financial problems later on.

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