Important Things to Remember before Applying for a Home Loan
Property is a vital asset that helps reap essential financial benefits. Irrespective of whether you are looking to purchase a property for investments or are in search of a new home, the financial sector offers several opportunities that are beneficial. A housing loan in India is a great option that offers financial assistance immediately, especially if you are short on cash, or do not desire to liquidate your savings.
With EMIs, the options to choose the home loan tenor per convenience, lenders help make your dream of purchasing a home a new reality. But, before you start applying for a home loan in India, go through the following suggestions that could ease the process and simplify your home loan repayment.
Research on Loan Options
With ample information, easily accessible online, you must do extensive research on the various options in the market before availing of a home loan in India. Your research must include three crucial elements that comprise a loan, namely, EMIs, down payment, and home loan repayment tenor. Researching these factors before a home loan application empowers any home loan borrower to go for a suitable home loan from a more reliable lender at attractive home loan interest rates. Home loan amounts are typically higher than any other loans, so ensure you explore the details and uncover the nitty-gritty that comes along during, before, or after the housing loan application.
Aim for Affordability
While there are plenty of options in home loans for you to choose from, affordability is a significant contributing factor that you will need to consider before availing of a home loan. You must be able to not only afford the fixed EMIs but must also be able to comfortably adjust them within the cost of living. Consider your overhead expenses beyond the EMIs you choose to pay each month and maintain a steady outflow of income to meet unforeseen emergencies. So, even if you can opt to purchase a house you like, in a location of your preference, being able to afford a housing loan is important.
Spend Cautiously
A factor that follows the affordability factor is that of monthly expenditure. When you have a home loan, follow a budget to meet your EMI needs. You have to be regular in paying the EMIs for credibility and avoid overdue or increased interest rates. Since spiraling down the non-repayment of a home loan is quite common, prevent it by channelling your resources toward regular repayment of the housing loan for complete ownership of your new home. This means spending cautiously and postponing other non-immediate purchases.
Choose Suitable EMIs
The EMI amounts depend on the borrower – you. Lenders typically offer varied EMI schemes to suit the needs of their borrowers. EMIs are also based heavily on the down payments you submit at the time of buying a new house. The higher the sum of the down payment, the lower will be the stress of the outstanding amount that gets converted as EMIs. It is also prudent to make sure that the chosen EMI amount never exceeds 45% of the total income.
Opt for a Comfortable Repayment Tenor
The time a home loan borrower takes to pay off a sanctioned loan is considered a repayment tenor. The repayment tenor and EMIs go hand-in-hand. While opting for a longer tenor could result in relatively smaller EMIs, it also significantly increases the interest rate, making you pay triple or double the loan amount owing to high interest. If you have a stable income, it is advisable to choose a shorter tenor that comes with higher EMIs. In such cases, interest rates are lower and encourage faster home loan repayment. Lenders also offer attractive home loan interest rates to those going for a shorter repayment phase.
Maintain a Decent CIBIL Score
Credit score maintenance is a key requirement to be availing of any kind of home loan within the financial sector. Be it cyclical credit card payments or a home loan repayment, maintaining regularity always helps. If you’re someone with a CIBIL Score of over 750, you will extract better home loan interest rates. This is coupled with a higher chance of quicker home loan processing as well as disbursal.
Know the Home Loan Foreclosure Norms
Keeping an eye on the evolving RBI norms could turn out to be advantageous on multiple levels. Foreclosing a home loan in India by repaying the outstanding amount in less than the committed timeframe saves you from added expenses. The sooner the home loan is paid for, the faster will your credit score improve. So, make sure to go with a lender who allows for part-prepayments and foreclosure on nominal rates.
Do a Home Loan Eligibility Check
It is essential to check your eligibility criteria for home loan and documents required for home loan before applying. Documents on your credit history hold importance here. Many reputed lenders offer eligibility criteria for a housing loan in India on their websites. Using these, you can check the home loan criteria and apply for a housing loan online or at the nearest, chosen lender’s branch.
Conclusion
Remember to do your homework wisely before applying for a home loan as only that is the ideal and most appropriate way to secure the lowest home loan interest rate. Remember to check your home loan sanction letter thoroughly when you receive it and make best use of online tools like a home loan EMI calculator. We wish you the best on this journey to securing your new home.