Purchasing a home is essentially a major financial decision. The person seeking a house of their choice prefers to use home loans, although obtaining a loan can be comparatively easy. Many people do not realize how important it is to get approval. Individuals seeking home loans should be very careful about several factors such as interest rates and credit scores. It’s important to choose an affordable and reliable mortgage product in your market.
Property is an asset that helps you reap numerous financial benefits. Whether you are looking forward to purchasing property for investment purposes or for finding your new home, the banking sector provides many loan opportunities that are lucrative and beneficial. A home loan is an excellent form.
Financial assistance if you are short on cash or are not in favour of liquidating your savings. With easy monthly instalments and the option to choose the repayment tenure at your convenience, banks help make your dream of purchasing a home a reality. But, before you begin applying for a home loan, go through these important suggestions that could help ease the application process and simplify loan repayment.
1. Research on Loan Options
With the easy accessibility of information on the internet, make an effort to do extensive research on the options available in the market before applying for a home loan. Your research should also include three crucial factors that formulate a loan: down payment, EMIs, and repayment tenure.
Researching these three factors before your home loan application enables you to choose a suitable home loan from a better lender at attractive interest rates. Home loan amounts are also usually more significant than other loans, so explore all the details and uncover every nitty-gritty that comes along before, during, and after the home loan application.
2. Aim at Affordability
While there are plenty of options in home loans for you to choose from, affordability is a significant contributing factor you need to consider before applying. You should be able to not only afford the fixed monthly EMIs but should also be able to adjust them comfortably within your cost of living. Consider overhead expenses beyond the EMI you choose to pay each month and maintain a steady income outflow to meet any unforeseen emergency. So, while you can always opt for purchasing a house that you like in a location you prefer, being able to afford the home loan is equally essential.
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3. Spend Cautiously
A factor that immediately follows the affordability clause is that of monthly expenditure. Once you have a home loan to repay, it is preferable and advisable to follow a strict budget to meet your equated monthly instalments. You have to be regular in paying the EMIs to maintain credibility and to avoid an overdue or an increased interest rate. Since spiralling down the non-repayment of a home loan is expected, prevent it by channelling your resources towards regular and timely repayment of the loan to gain full ownership of your home. Its means spending with caution and postponing any non-immediate purchases. Such a controlled outflow of income would enable you to pay off the debts as soon as possible.
4. Choose Suitable EMIs
The equated monthly instalment amount depends on you. Banks offer varied EMI options to cater to and suit the different needs of the borrowers. EMIs also rely heavily on the down payment you submit when making a house purchase. The more significant the sum of the down payment, the lesser the stress of the outstanding amount being converted into EMIs. It is also best to ensure that your chosen EMI amount does not exceed 45% of your total income.
5. Repayment Tenure
The time you take to pay off the sanctioned loan is your repayment tenure. The repayment tenure and your EMIs go hand-in-hand. While opting for a longer term might result in smaller EMI amounts, it adversely increases the interest rate levied, resulting in you having to pay double or triple the loan amount due to high interest. If you have a stable and recurrently increasing income and plan a strict budget, it is advisable to choose a short repayment tenure with higher EMIs. Interest rates for such assignments are considerably lower to encourage faster repayment. Banks also offer attractive interest rates for those who decide upon a shorter repayment cycle.
6. Maintain CIBIL Score
Credit score maintenance is an essential requirement to be applying for any loan within the banking sector. Be it a cyclical credit card payment or a loan repayment, regularity pays off well. If you have a CIBIL score of more than 750, you are liable to extract even better interest rates on your home loan. It is coupled with a considerably higher chance of quicker loan processing and disbursal.
7. Know Foreclosure Norms
Keeping a keen eye on the changing RBI norms may benefit you on many levels. Foreclosing your home loan by repaying the outstanding amount is less than the committed time saves you from paying any added expenses. The sooner your loan is paid for, the higher your credit score.
8. Home Loan Eligibility Check
It is essential to check your eligibility before applying for a home loan. Documents about your credit history hold utmost importance here. Many banks, like YES BANK, and KOTAK BANK, provide eligibility criteria for a home loan on their website. With YES BANK, for instance, you can check the requirements and apply for a home loan online or at your nearest Bank.
9. Additional Charges
Apart from the EMIs, there might be other administrative, processing, or service charges that banks levy upon borrowers at the time of loan application. Make sure that you discuss these with the lender before the loan application. Check whether they are one-time or monthly charges; if they are monthly charges, then they need to be considered along with your EMIs, and your monthly finances planned accordingly.
10. Read the Documents Carefully
Go through the agreement documentation carefully for overall and comprehensive knowledge of the loan application. At YES BANK, we provide assisted loan services. However, we insist you read the necessary documents before signing the loan papers for your satisfaction and long-term mutual trust.