Applying for a home loan can be exciting and challenging at the same time; many people tend to feel overwhelmed with the various processes involved with the loan sanction. In this guide, we provide a few valuable tips for first-time home loan applicants.
Buying a home is a dream for many Indians. While the process of looking for the best home can be exciting, it is also one of the biggest and most important financial decisions you may take in your life. Today, you may find many lenders in India willing to offer you a home loan at competitive interest, but the procedure to apply for the loan may seem complicated. But, if you know the exact know-how, it can become a smooth process.
If you are a first-time loan applicant, the following tips will help you immensely.
Assess your financial status
Before proceeding with the home loan application process, it is paramount that you assess your current financial status. You must review your savings, liabilities, and assets. This will let you know the exact amount you can afford to spend and the amount you must borrow. Several experts suggest that you must choose a loan amount so that the monthly instalment is not more than 60% of the net monthly income.
Do your research well
Today, many lenders offer a variety of home loan options. It would help if you took your time to research about the different plans, their features, the interest rate, associated charges and terms and conditions. When you are comparing home loan online give equal weightage to all the parameters rather than choosing a loan based on the low-interest rate alone.
Know your credit score
Your credit score is one of the crucial things that the lenders consider while sanctioning the loan as it reflects your creditworthiness. Most lenders have a minimum credit score requirement from the potential borrower, and if your score is less, your application may be rejected. So, before approaching the lender for a home loan, make sure that you know their credit score requirement and check if your score meets their need. If your score is low, make sure that you take efforts to improve the credit score and then apply for a loan.
Gather the documents
No matter, the type of home loan you wish to avail, be it a home purchase loan, a home construction loan or a home extension loan, you must comply with the documentation process. Make sure to read the documentation requirements of the lender and gather all the necessary documents before filling the application form.
This will help you get your loan approved faster. Generally, most lenders would require you to provide the following documents – identify proof, address proof, income-related documents, tax returns, and property-related documents.
Discuss the terms and conditions with the lender
Before you sign the loan agreement documents, you must read the terms and conditions and understand all the terms mentioned therein. It is not mandatory to accept all the terms; you can negotiate with the lender and request them to revise specific terms so that it helps you reduce your financial burden while repaying the amount.
Another vital thing to consider while applying for a home loan is to assess the lender’s ability to provide you with additional benefits like a top-up loan, flexible repayment tenure, responsiveness to changes in the regulatory fees as directed by the RBI, etc. These benefits will ensure that you have a hassle-free borrowing experience.
So, in a nutshell, applying for a home loan is a long-term financial commitment, and you must evaluate the various options before making the right choice.