Everyone desires to have their own home. However, the big-ticket real-estate price acts as a hindrance in fulfilling their dream. In such a scenario, opting for the home loan route is the most feasible. It helps borrowers access lump sum loan amounts without liquidating their lifelong savings.
However, a home loan is a long-term financial commitment that demands due diligence and planning. Entire borrowing might prove counterproductive if borrowers are not well aware of the intricacies of the credit option. Borrowers must apply for a housing loan only after knowing the ins and outs of it. Doing so will help make the credit rewarding and avoid rejection of loan applications.
Know the top things to consider before applying for a home loan online
Borrowers should consider the following factors before proceeding to apply for a home loan online.
- Compare loan options: The first thing that borrowers must do is research several loan options. Investing time searching for the right lender will help them fetch lower interest rates and other better loan deals. Also, borrowers should avoid applying for a home loan to multiple lenders at the same time as it will have a negative impact on their credit score, and a dip in the credit score may result in the rejection of the loan application.
- Know the eligibility criteria: Borrowers can qualify for the loan amount if they adhere to the eligibility norms set by the lenders. It is through the eligibility criteria that lenders scrutinise a borrower’s profile. Here are the eligibility criteria that borrowers must meet:
- Applicants must be Indian.
- Age bracket for salaried applicants is 23 to 62 years.
- Self-employed applicants must belong to age group of 25 to 70 years.
- Salaried individuals should have work experience of at least 3 years.
- Self-employed individuals should have 5 years of minimum work experience.
- 3. Assess credit score: A credit score is a three-digit numerical summary of borrower’s repayment history. A higher credit score of 685 and above will help borrowers secure a lower interest rate and enhance the chance of getting quick loan approval. In this context, borrowers should also know how credit score determines home loan EMIs.
- Keep documents handy: It is equally prudent for borrowers to keep the following necessary documents in order:
- KYC papers
- Income proof
- Address proof
- Bank account statements
- Salary slips for last three months
- Affordable EMIs: The monthly instalments determine how comfortably borrowers will sail through the entire repayment tenor. In this context, you can choose the home loan EMI calculator and try out several permutations and combinations of the loan amount, interest rate and loan tenor to decide on the EMI amount they can afford to pay alongside managing other financial liabilities.
- Save for down payment: Before applying for a home loan online, borrowers must define their budget and sort the amount for a down payment accordingly. Ideally, home loan amounts are sanctioned up to 80% to 90% of the property value. The remaining 10% to 20%, borrowers have to bear. Higher the sum of the down payment, lesser will be the EMI burden.
- Choose competitive interest rate: Home loan interest rate determines the cost of borrowing. Hence, borrowers try and opt for a competitive interest rate. Moreover, borrowers should be smart in choosing between a fixed and floating interest rate.
- Suitable loan tenor: Borrowers should emphasise choosing a suitable loan tenor as it significantly impacts interest rate and EMI liabilities. A longer loan tenor helps reduce the EMI burden; on the other hand, a shorter loan tenor lowers the cost of borrowing. Using a home loan calculator will help individuals choose the right repayment tenor.
- Associated charges: Interest rate is not the only charge lenders levy on borrowers. They also levy additional charges like processing fees, foreclosure charges, administrative charges, etc., which impact overall loan expenditure. Hence borrowers must keep an account of these hidden charges and discuss them with the lender before making a home loan application.
Furthermore, borrowers should have in-depth ideas regarding things to consider before foreclosing a home loan account. Once all pointers mentioned above are considered, borrowed can apply for a home loan without facing any hiccups.
Moreover, borrowers should not miss out on checking on the exclusive pre-approved offers extended by leading financial institutions. These offers are available on financial products like home loans, loans against property etc., helping accelerate the loan application procedure and reduce hassles of lengthy documentation. Intending individuals can check their pre-approved offers by submitting their names and contact details.
To sum up, a home loan is a viable form of financial assistance, helping one realise their dream of owning a home. However, before borrowers decide to apply for a home loan online, they must know all the particularities that will determine the course of the lending process.