How to Buy a Flat by Getting a Loan from a Bank

Almost everyone has the dream of having their own home. Now, it’s a different thing that everyone might not be able to make their dream come true. Building your own house might take a lot more hassle and finance than buying a flat. If you’re a young service holder and thinking of having your own home, you can take a bank loan. But don’t know how to do so?

Please read this blog to get the idea because here we’ll discuss how to buy a flat by getting a loan from a bank. 

How to Take a Home Loan from Bank?

Around two decades from now, only a few banks and some financial institutions were offering house loans. Even before then, only the Bangladesh House Building Finance Corporation (BHBFC), that’s a state-owned financial institution, was the only institution providing home loans. Now, the situation has changed a lot, and several private banks and other financial institutions like DBH (Delta Brac Housing), and IDLC (Industrial Development Leasing Company of Bangladesh) are giving home loans. 

A non-banking institution like DBH has not set any minimum income limit to take home loans. Whereas another institution IDLC has stipulated that your monthly income needs to be at least TK 20,000 to get home loans. But if you want to take a home loan from any bank, you need to have at least a monthly income of TK 40,000 to get your loan approved. Whether banking or non-banking financial institutions, both prefer young borrowers to aged ones. 

Banks will provide you with home loans up to 70 percent of the actual property value. This amount will be up to around TK 1.20 crores. Whereas a non-banking financial institution will give you up to 80 percent of the real property value. Whether you are taking a home loan from a bank or any NBFI, none will give you the loan for more than 25 years. 

Again, you have to arrange a reliable guarantor for your loan. You need to mortgage your property papers to the bank or NBFI until you repay the full loan amount. You need to give the bank all the necessary documents they ask from you including proof of your fixed income. Banks or NBFIs won’t offer you a fixed interest rate like the BHBFC, rather the interest rate will be variable and they will adjust the rate based on the money market’s liquidity situation. 

Nowadays, banks are getting more interested to offer home loans because the default rate is quite low. As you won’t like to lose your dream home at any cost, you’ll arrange the money to repay the loan anyhow. So, if you can meet the mentioned criteria of the banks, you can easily get a home loan from a bank to buy your flat. 

Read also: Things to know before taking a loan for home or flat

Benefits of Home Loans

You won’t be able to get a huge amount of money for your home or flat just like that. Home loans can give you a lot of benefits in this regard:

• Liquidity Benefits:

Whenever the thought of getting your home comes to your mind, the idea of a  huge sum of money appears at the same time. You’ll be able to get your home with a liquid amount of money. A sudden supply of such a liquid amount of money can be available to you only by taking a home loan. You might have that amount in your bank account but using your full money to buy your flat can get you into huge tax payments.

Read also: Key consideration for loan against property

• Tax Advantages:

Home loans can give you certain tax advantages. You won’t need to pay the whole amount of the tax to the government because the government has reduced the tax amount by the interest amount you need to pay to the bank.

Read also: A complete guide on Property taxes and fees in Bangladesh

• Low Rate of Interest

Home loans offer a lower rate of interest than other loans because the lenders remain in trouble as the borrowers might fail to repay the loan. Then, the lenders will have to sell the property to get their money. That’s why home loans carry a lower rate of interest than other loans. 

Drawbacks of Home Loans

Home loans will serve you several benefits but there’s no unmixed blessing in this world, so, home loans also have some drawbacks. Let’s know them:

•  Interest Rates:

The interest rates on home loans are lower than the other loans but still when you are paying a home loan you are paying more than your home or a flat price. Sometimes, you might see that you have paid the total EMI or equal monthly installments but you haven’t paid the principal amount yet. 

• Long-run Obligation:

Taking a home loan is a long-run obligation. You need to think about everything in advance because it might happen that you’ve taken a loan but later on you’ve become unable to repay it. So, think about everything well before getting into this obligation or making this commitment. 

• Lost Opportunity:

Whenever you are investing, you must be thinking of making a profit because you won’t make any investment without the thought of getting any profit. Once you’ve taken a home loan, it is considered a lost opportunity because you can’t expect any profit from it. It’s a long-term obligation and you’ve to repay it within a specific time. Experts suggest that you need to think carefully before taking a loan, or you can use your money in some other better ways.

After buying a flat with a home loan from the bank, the flat should be decorated to make it look beautiful. Read our another article How to make your first flat looks amazing

Final Words: 

Now, you must have got a clear idea about how to buy a flat by getting a loan from a bank. If you have any queries or need further assistance please contact Best – Tech Properties Ltd.

Bonus tips: The best areas to purchase a flat in Bangladesh