Best Tips for Getting a Home Loan

Currently, many people often get a home loan to reduce financial pressure when buying a house. However, if you do not learn the information carefully and get advices from those who have experiences, you can easily fall into a state of financial imbalance.  So, here are best tips for getting a home loan

I- Is Getting a Home Loan a good solution?

For people who do not have enough financial capacity, a home loan from bank is considered a good and safe solution for the following reasons:

You have the opportunity to own your dream home even if your financial resources are limited.

To participate in attractive incentive programs from banks or investors associated with the bank.

You can use the house you intend to buy as collateral in case there is no mortgage of a larger value.

Before doing home loan procedures, the bank has appraised the documents related to the investor's reliability, you can be assured of the legality of the house.

II- Best Tips for a Safe and Low-risk Home Loan 

1- Have a money amount available about 30% of the home value

The first home loan tip is considering to buy a home based on your financial ability.  In fact, banks can offer lending from 70-80%, even 90% of the home value.  However, before making a purchase decision, you are encouraged to accumulate some available money amount that is at least 30% of the home value.  This not only helps you reduce the pressure of paying interest and principal monthly, but also ensures that your daily life is not disturbed.

Best Tips for Getting a Home Loan

Moreover, if the home loan ratio is too high, you must have strong enough financial resources, an effective repayment plan and ensure that the monthly debt payment is not higher than 50% of income.  If you exceed your existing financial resources for a long time, you may inadvertently leave "bad debt" in the future.

2- Read the Home Loan agreement carefully

Home loan agreement is one of the very important documents that you need to pay special attention to.  Before signing, you should carefully read the terms of the agreement especially issues related to interest rates, late payment penalties, prepayment fees,..If there is something unclear or If you find unusual problems, you need to talk directly to the mortgage  officer and request updates and supplements if necessary.  Furthermore, after signing, you must keep a copy of the agreement with full signatures, seals and affixed seal from the credit institution to ensure future legal issues.

3- Consider the appropriate Home Loan term and line of credit

Normally, banks usually stipulate a maximum home loan term of 20-25 years.  However, many customers when borrowing money often have the mentality of wanting to repay quickly, so they choose a short home loan term.  This inadvertently creates huge debt repayment pressure if you do not ensure stable financial ability.  On the contrary, for a long home loan term, the principal and interest are reduced, you have more conditions to increase income and be more active in long-term financial allocation.  Therefore, before choosing a home loan package, you need to consider the line of credit to consider the appropriate home loan period so as not to affect your credit score.

4- Pay off Home Loan early to avoid bad debt

Each customer when applying for a home loan at a bank has a specific credit score.  You need to pay attention to the loan settlement date to avoid late payment and being listed as bad debt.  If the home loan is overdue, the bank will apply a higher penalty interest rate than the interest rate in the loan term.

Best Tips for Getting a Home Loan

Furthermore, you can also pay off the home loan earlier than the specified time limit.  But you should note that banks also have clear regulations on penalty fees for early repayment.  That is, when you complete the repayment of the principal loan earlier than the home loan term, you will be charged a fee ratio based on the total outstanding balance.  Therefore, you need to find out details about whether you can pay before the due date or how much the fee if you pay before the due date so as not to be surprised.

III- How to choose a Best Bank for Getting a Home Loan? 

Customers often think that taking a bank loan to buy a home is a risky decision.  However, you can rely on the following criteria to choose the best home loan from bank:

1- Home Loan interest rate

You should consider the home loan interest rate and loan incentive packages at many banks to choose the most suitable interest rate.  Currently, there are two commonly used methods of calculating interest: interest calculated on the reducing balance and interest calculated on the initial outstanding balance.  In fact, low interest rates are not always good.  Because you can only enjoy the preferential interest rate for a certain period of time.  At the end of this term, the interest rate will float and fluctuates constantly according to the regulations of each bank.  Therefore, you should consult your mortgage loan officer in advance about these cases.

2- Banks with appropriate Home Loan thresholds

Each bank will set a home loan threshold after conducting the application's appraisal.  Customers can consider this point to choose which banks have good home loans in accordance with their existing financial capacity.

3- Flexible Home Loan term

You need to consider the appropriate interest rate and home loan term for your own benefit.

Best Tips for Getting a Home Loan

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