All these advertisements target the dream of every individual-- to own a home.

Today, these dreams are not far flung as a home loan is not a challenge. Since the government is trying to encourage growth in the real estate sector, home loan options available in the market are in abundance and extremely competitive.
A stable job, IT returns for a couple of years and you can bag a loan without too many hassles. Once all your papers are in order, processing the loan takes little time.

But just because every bank around the corner is ready to give you a loan, does not mean that you go for it without a thought out plan. There are several components of a loan that one needs to know about before deciding where to take a loan. The importance lies in the fine print.
Most banks provide about eighty percent of the cost of your house in the form of loan. The rest of the twenty percent needs to be arranged by you, this is referred to as the down payment.
Banks have varying interest rates and that is normally the first thing that one needs in terms of a check list. Interest rates can either be floating or fixed. Fixed interest rate means that whatever maybe the rate prevailing in the market, your loan will be charged at the rate that was prevalent when the loan was procured. Floating Interest Rate, on the other hand, changes. This implies that interest charged on your loan will depend on the prevailing market rate.

Apart from this, one needs to be careful about the pre-payment clause of the loan as well. Certain banks, mostly private ones, charge a premium if you pre pay your loan. This is called as pre-payment penalty. This pre-payment penalty is also of two types:
1. Part pre-payment
2. Foreclosure of loan

You can either pre- pay your loan in one go and foreclose it or in small portions over a course of time. While some banks may not levy a penalty on foreclosure of a loan, they may do so in case of part pre- payment.
These factors are note- worthy while finalizing a loan from any financial institution. Better to be aware than be caught off- guard during the course of loan payment.


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