Applying for a home loan is a very hard decision to take, simply because of the long period of it's repayment .

Home loans are known to be a loan which is secured with a lien, and the lien is defined as a valuable property you own, like a real estate, a car , company or simply your house. And the value of the borrowed sum is fully dependable on the value of the owned lien.

But before starting the journey of finding the better home loan that fully matches with your requirements, the following factors have to be taken into your consideration :

1)- Monthly repayments are fully dependable on your monthly income (salary ), the maximum monthly installment should not exceed 35% of your salary after the deduction of taxes and fees.

2)- Always take a deep look into future, because you may face some financial problems that may affect your salary, so it is better to you to adjust a monthly installment, and it is preferred to be around a 20% of your monthly salary.

3)- Always remember to know all terms and factors of borrowing on your country or state, to know the percentage of the interest that you can utilize.

4)- Remember to know exactly lender's defined overdue interest rate.

5)-In the case of not paying one or more of the installments, because of your Negligence or lack of interest , the lender have the full rights to raise the interest rate and rescheduling your payments.

6)-If you didn't pay too much of the required installments, the lender have the right to sell your secured property (lien) in the auction, and receive his total amount of money which he paid to you as a loan.


There are two kinds of interest rates which home loans are based on :

A)- Fixed Interest Rate Home Loan:

Here, home loans are subjected to fixed interest rate at the first few years, so you could have the opportunity to schedule your payments for a long time ( first few years) and that's all because of the constant interest that you are dealing with. Thus, interest rate will not change according to the market changes, and this kind of interest rates became the basic solution for the newly married couples or anyone who have a fixed and continuous income. Simple thing have to be mentioned here about this type of loans, which is after the first period of time where the interest was fixed, it will automatically set-up to the new market interest rate. This period is controlled and previously specified by the lender so bear in mind to ask about the exact period when you apply for a home loan.

B)- Un-fixed Interest Rate Home Loan :

As the name implies, the interest rate is not fixed ( fluctuating ) and varies according to the market demands. Thus, interest rate might go to be high and might go to be low, it is totally controlled by the market and nobody could predict it's value previously. Here, we have to take in our consideration that lenders also could control this interest by there way, they always raise it too fast if compared with the lowering procedure, and that will lead them to make extra profit.


Finally, as a homeowner and as a borrower, then you have the full rights to reschedule your debts, either by lengthen your period of repayment which will raise the interest rate on you, or by shorten the repayment period and of course that will lower the interest rate.

Home Loans News

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