The market for home loans has never been this hot

Where before, about a decade ago, owning your dream house seemed like a
daunting task, today, however, it's as easy as pie. More and more people are
now getting home loans in order to buy houses. However, along with this rise in
home loan demand, the supply has also steadily increased. With more and more
banks and other financial institutions falling over each other to lure
customers, it has become very difficult to work out who is offering the best

Here is a look at some tips on how to get the best deal for you to
acquire your dream home.

What are the eligibility criteria for getting a home loan?

The two basic factors that need consideration when it comes to home
loans are the amount of loan repayment you can afford to make per month and a
specified percentage of the cost of property. These two factors are where the
home loan disbursement is based on.

Your income plays a big role in assessing your ability to repay, and
likewise with your expenditure pattern. For instance, if your monthly income is
$10,000 and your monthly expenses $8,000, then that means that you can afford
to pay $2,000 towards any home loan you take. This amount can now be taken as
an installment amount and your eligibility can be reverse-calculated.

So with these figures at hand, you therefore decide to get a home loan.
At an interest rate of 9%, the monthly installment of a 20-year loan will be
$900. Therefore, the higher your repayment capacity, the higher your loan will

The amount you get from your home loan largely depends on a number of
factors. These include your age, profession, salary, the city you reside in
among others. Essentially, the variation may also depend on the lender.

What are the Interest Rates offered for Home Loans?

Interest rates for home loans differ from institution to institution.
Some can be as low as 1% and some can reach to as high as 12% or higher. The
interest on home loans is usually calculated either on monthly reducing or
yearly reducing balance.

There are also some cases where daily reducing basis is also adopted. In
annual reducing, which is the most common, the principal, for which you pay
interest, reduces at the end of the year. Thus, you continue to pay interest on
a certain portion of the principal which you have actually paid back to the

Tony Forster has a keen interest in living debt free having been "up to his ears" before realizing the need to take control. He has compiled an online financial article resource at