Dev Singhraha
Relocation Expert
When you decide to take a loan from the bank to you, make sure you go through all the terms and condition attached to it. Taking the help of the expert is also a good idea to help you understand the nature of commitment you are getting yourself into. But most often few terms sound easy to understand but are difficult to grasp until we see the effects.

Loan tenure

When you apply for a loan, your bank asks you if you want the loan tenure to be 20 years long or 30 years or sometimes even less. At the time of buying the property, 30 year seems like a good option as the monthly EMI will be less and paying. But after you retire and if you are still paying the EMI of the property, then it might be difficult for you to juggle the money then. Choosing a shorter tenure is a good option as it lets you free of any commitment both financial and emotional much before. Before you sign on the dotted line and fix the loan tenure, think deep about the long-term effect it will have on your finances. 

Interest rate

The rate of interest for the loan can get confusing. The loan lenders and banks offer the borrower two kinds of interest rates: floating rate and the fixed rate of interest. Floating rate of interest keeps often changing, depending on the market. It can go up as well as go down unlike the fixed rate of interest. It remains the same for the whole tenure. Often there is a clause in the loan agreement that the fixed rate of interest will be revised after a particular period. In such a case, it does not make any sense to choose the fixed rate of interest if it is going to change after a while. 

Adding a co-borrower

If the bank rejects your application for the loan amount due to eligibility issue but suggests that they can agree if your spouse decides to be a part of the loan amount. The spouse consents to the co-borrower just on the paper. In such a case, it can be difficult if anything unfortunate happens to you. The banks will depend on your spouse to pay all the EMI by themselves. It is better to wait a little more and not overextend your loan amount that it won’t be possible for one person to pay it all for the long tenure.
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