Are you looking to buy your ideal home?
Buying a residential property is a crucial decision one makes in a lifetime. Owning a home gives the utmost sense of security, especially when you can acquire at the earliest instead of waiting until you accumulate appropriate funds in one go. Housing loans make it possible for you.
But how can one approach it?
Let’s explore.
What are the factors to check while applying for a housing loan?
- Eligibility Know your home loan eligibility before you select a house you wish to purchase. It is imperative to understand your eligibility for the home loan. The amount of loan amount you may be eligible for solely depends on several factors like your income, age, current liabilities, nature of employment, credit score, and others. Talk to your housing loan financing company to understand your eligibility for the loan. You can also use the home loan eligibility calculator available on their website to understand your eligibility criteria.
- Your Credit Scores You need to check your credit scores before applying for a home loan. Many lenders prefer a healthy score greater than 700 for a home loan applicant. A healthy credit score can also help you secure your loan at lower interest rates. It is always recommended to clear all dues. Look for ways to build a healthy credit score before availing of a home loan.
- Rate of Interest The interest rate you will be charged on your loan against the property varies according to your income, loan amount, tenure, credit history, and lender. Additionally, there are two types of housing loan interest rates chosen by the person availing of the loan.
- Fixed
- Floating
- Monthly EMI Charges Calculate your monthly EMI with the help of an EMI calculator. Calculating EMI charges will understand the affordability and feasibility of availing of a housing loan from your end way ahead of going forward with it. Check if the EMI fits in your budget, and accordingly adjust the tenure. Remember that part payment in case of extra income such as an annual bonus, etc. can help you reduce your tenure and interest. A reduced tenure helps you save on your interest, but the EMI will be higher. Use a home loan EMI calculator to understand your monthly outflow. . Choose the right proportion of tenure and interest to derive the perfect EMI that you can afford. It will help you gauge whether you are ready for a long-term commitment. Please note that your final EMI amount will also have other components such as insurance and service fees.
- Down PaymentMost lenders only offer a part of your property value. The amount for down payment ranges between 75% to 90% depending on your eligibility, repayment capacity, and the nature and value of the property. The lender will disburse the funds only after your down payment to the property is confirmed by them. You are also required to submit the necessary paperwork and stamp papers related to your property. Calculate the margin you get after your paperwork expenses and down payment and see if the property is affordable to you before taking the plunge.
- Terms And Conditions It is always best to check all the terms and conditions before making a financial commitment like a home loan. Clarify the different terminologies with an industry expert and understand all the fine prints. Check for prepayments, penalties, service charges, and do thorough research before you sign it. Look for the lenders who offer prepayment facilities so that you can pay a lump sum or make a part payment when your finances improve because situations are not going to be the same all the time. They are bound to change. Having the flexibility to repay the loan whenever you can without burning a hole in your pocket will give you that sense of freedom.
Grihashakti is a registered housing finance services partner trusted by many since 2015.
