The housing loan interest rates are at an all-time low right now, making it a great time to invest in a house. However, buying your dream home requires considerable financial planning, even more so if you apply for a housing loan. That’s why before you approach your preferred lender, here is all you need to know about the home loan process.
A quick guide to taking housing finance
#1 Take a good look at your finances
Before applying for a loan, check your savings, assets, current debts, and monthly expenses. Then compare it with your monthly income. Doing this exercise gives you an idea of how many funds you can set aside for repaying your loan.
Besides, housing finance usually comes with extended loan tenures that alleviate your repayment burden. How? You can easily take up to 25-30 years to pay off your loan. Here, use a home loan EMI calculator to gauge your EMIs and interest payable depending on the tenure.
However, it is essential to note that while longer tenures lead to smaller EMIs, you pay a larger interest amount over time.
#2 Keep track of your CIBIL score
Since the CIBIL score reflects your creditworthiness- how you manage your credit, lenders carefully check it while reviewing your loan application. You must try to keep a score above 750 to land a more competitive home loan offer.
Have a low credit score? Worry not. You can increase it by taking the following steps-
- Pay your credit card bills, EMIs, and other pending dues timely
- Avoid applying for multiple loans simultaneously
- Regularly review your credit history online to check for any errors
- Keep your credit utilisation ratio (CUR) at up to 30%-35% of your current limit
#3 Do your research
To choose a lender, compare different loan schemes. This includes checking home loan interest rates, eligibility criteria, EMI facilities, loan tenure, etc., before finalising a lender.
#4 Keep your documents in place
Before processing your loan application, the lending institution checks if your property is free from legal disputes. Therefore, a team of experts examines and evaluates your property. Prepare for the legal verification by keeping your property documents, such as the title deeds, no-objection certificates (NOCs), and other ownership papers ready.
Similarly, the lender also conducts a technical verification of your property to review its market value, physical health, building specifications, and more. They also check if your house adheres to all the construction norms.
#5 Understand the fine print
Besides checking your home loan eligibility, loan tenure, EMIs, etc., you must also carefully review the hidden costs associated with housing finance. Discuss charges like valuation fees, processing fees, late EMI payment fees, pre-payment charges, legal fees, conversion fees, loan tenure change charges, and more with your lender.
Check if your lender is upfront about these additional costs since they eventually add to your repayment amount.
In conclusion
It is clear that being prepared before approaching the lender can make the housing loan process much easier. Start your dream homeownership application by finding a reliable financier today!
