Important points you should know before applying for a home loan

Property is the only asset that helps you reap multiple financial benefits throughout your life. If you are looking to invest in a property or buy a new home, you must know that you don't have to face the financial burden alone. The banking sector of India provides many loan opportunities that are lucrative and beneficial. If you are not in favour of liquidating your savings or facing a shortage in cash, then having home loan assistance would be a great option for you. You can return the amount with easy instalments and choose the repayment tenure at your convenience. Banks in India bring home purchasing dreams to come to life. 

But before you get all excited and start applying for a loan, there are certain suggestions that will help you ease the application process and simplify loan repayment. 

Research on loan options 

With internet availability on your mobile phones, you can easily access all the information you require with just a click. Try to make an effort to do extensive research as there are plenty of options available in the market. While researching, make sure you include these three factors that formulate a loan: down payment, EMIs and repayment tenure. Learning about these three factors will enable you to choose which suitable home loan from a better bank at attractive interest rates. If we compare it to any other types of loans, the home loan amounts are usually larger, so make sure you are searching and exploring all the relevant details before applying for a home loan. 

Also Read: Important Points you Should Know before Applying for a Home Loan

Aim at affordability

There are numerous options available for you when we talk about home loans. Among so many factors, affordability is a crucial factor to look for before applying for a home loan in India. You should not only look for affordable EMIs but should adjust the EMIs comfortably within your budget. You can always opt for purchasing a house that you like based on your prefered location and affordability. 

Spend your income cautiously 

After the affordability factor, you need to follow a monthly expenditure factor. You need to follow a strict budget to meet your equated monthly instalments once the time of repaying your home begins. In order to maintain your credibility, it is advisable to regularly pay the EMIs. And one must avoid overdue or will encounter increased interest rates. If you spend your money cautiously and postpone some purchases that are not mandatory, you will always stay regular and gain full ownership of your home. If you have managed to gain this outflow of income, it will enable you to pay off the debts sooner than expected. 

Choose suitable EMIs

Basically, it's you who's equated monthly instalments depend upon. Before applying for a home loan, be smart to surf through the best possible solution. The bank offers a variety of EMI options that suit your different demands. Your EMIs are based on the down payment you submit at the time of purchasing your house. If you submit a big amount of downpayment, then the lesser stress you have to go through with the outstanding amount being converted into EMIs. 

ProTip: It would be best to choose an EMI figure that does not exceed 45% of your total income. 

Repayment Tenure 

The repayment tenure is the time you take in paying off the sanctioned loan. When choosing the longer tenure, you will encounter small EMI amounts, which increases the interest rate to be revived. As a result, you will have to pay double or triple the loan amount because of the high-interest rate. Interest rates in such tenures are comparatively lower in order to encourage faster repayment. Before applying for a home loan, if you decide upon a shorter repayment cycle, it will offer attractive interest rates. 

Also Read: Financial Question Answers Before Buying Home

Keep in mind that you need to maintain your CIBIL score. 

Before applying for a home loan, you need to keep in mind that a credit score is essential to maintain. If you can, even better interest rates if your Cibil Score is more than 750. So before applying for a home loan, check your score and maintain it so that you can have a higher chance of a quicker loan processing and disbursal. 

Know Foreclosure Norms 

RBI norms are changing from time to time. So before applying for a home loan, if you keep a keen eye on these changing norms, it will stand advantageous for you on so many levels. If you repay the outstanding home loan sooner than the committed time, you will foreclose your home loan and save time from paying any additional expenses. And remember, the sooner the loan is paid, the higher your credit score stands. 

Check your home loan eligibility. 

Before applying for a home loan, check your eligibility. Documents needed for your credit history are very important. Banks will inform you about the criteria when you are about to apply for a home loan in India. 

Always remember to be alert and go through all the agreement documents before applying for a home loan in India. It would be best to be satisfied with the loan documents and long term mutual trust. Following is also a list of questions that will answer the most asked question- 

What should I ask the bank when applying for a home loan?

You need to be thorough with your research and ask relevant questions to get the best deal that suits your situation. Below is the list of questions-

What are the comparison rates? 

Knowing about the comparison rates from the bank will help you decide whether you want to continue to get a home loan from the same bank or not. 

Is this the best rate you can give? 

The mortgage industry is quite competitive; you can negotiate with the lender for the interest rate when given a chance. 

What features are available?

It is the habit of plenty of borrowers to overlook the features when applying for a home loan in India. If you stay alert, you will be able to save a lot of money. 

What type of repayments can I make?

In most scenarios, the case is lenders are offered monthly, fortnightly or weekly repayments. Nevertheless, it is advisable to ask the lender to see if more options could be available.

What documents do I need to provide?

If you wish to process your home loan in India quickly, you need to be thorough with as much information as possible. If you know about all the required documents from the beginning, you will be well prepared while applying. 

Also read: Common Mistakes Home Loan Applicants Should Avoid