Last Updated on November 1, 2022 by
Property or land is an asset that assists you in reaping various financial advantages. Whether you are looking to buy a property for investment reasons or to find your new home, the banking sector offers many loan opportunities that are beneficial and lucrative. A home loan is a wonderful way to avail of financial help if you are short of cash or funds or are not in favour of redeeming your investments or savings. With simple monthly instalments and the choice to select the repayment, whether it is a 30 lakh home loan EMI or 80 lakh home loan EMI, you can now easily meet your dream of becoming a homeowner. However, before you start applying for a home loan, go through various crucial suggestions that can assist ease the application procedure and simplify your loan repayment.
Table of Contents
∙Research the loan options
With easy information accessibility on the internet, you can do in-depth research on choices available in the market before placing an application for a home loan. Your research must also involve the 3 important parameters that formulate a home loan, namely, down payment, EMI, and loan repayment tenure. Doing in-depth research on these 3 parameters before placing an application for a home loan allows you to select a preferable loan amongst the available lenders at the best rate of interest. Home loan proceeds also are generally bigger than other loan options, so ensure to explore all the important details and uncover the nitty gritty that comes with a home loan application.
∙Look at affordability
While there are various home loan options for you to select from, affordability is a major contributing parameter that you must factor in before placing an application for a home loan. You must be able to not just afford the fixed EMIs but must also be able to easily adjust them in a comfortable manner within your living cost. Consider overhead expenditures beyond the loan EMI you select to pay every month and maintain a smooth income outflow to mitigate any of your financial exigencies. Thus, knowing your affordability when purchasing a home loan is extremely important.
∙Spend Carefully
Your monthly expenditure must be analyzed first to determine your affordability. Once you opt for a loan to repay, it is advisable and preferable to follow a strict budget to mitigate the EMIs. You must stay regular with your payments for EMIs to maintain good creditworthiness and avoid any overdue or enhanced rate of interest. As spiralling down the loan, non-repayment is common; avoid this by channelling your resources towards timely or regular repayment of your loan to acquire complete ownership of the home. It means spending carefully and postponing any kind of non-immediate buys. Such a controlled income outflow would allow you to repay your debt as fast as possible.
∙Select suitable EMIs
The EMI amount depends on you. Bank provides varied EMI choices to cater to and match your distinct needs of yours. EMIs even depend massively on the down payment you make at the time of making a home purchase. Higher the down payment amount, the lesser the stress of outstanding proceeds being converted into loan EMIs. It is even best to make sure that your selected EMI proceeds do not surpass 45 per cent of your overall income.
∙Repayment tenure
The time you consider repaying the sanctioned loan is known as your repayment tenure. Repayment tenure and your loan EMIs go hand in hand. When opting for the higher repayment tenure may lead to smaller EMI proceeds, it massively enhances the rate of interest to be charged, making you pay triple or double the loan proceeds owing to high interest. If you hold a recurrently increasing salary or income and plan an extremely strict budget, it is recommended to reduce to encourage faster loan repayments substantially. Banks even provide an attractive rate of interest for those who take the decision on a shorter repayment cycle.
Also Check: 80 lakh home loan EMI
Maintain a good CIBIL score
Credit score maintenance is an important requirement to consider before applying for any type of loan in the banking sector. May it be loan repayment or cyclical credit card dues repayment, it regularly pays off here really well. If you hold a credit score of 750 and above, you are liable to get better rates on a home loan. This clubbed with a substantially higher chance of faster loan processing as well as disbursal.
Beware of the foreclosure norms.
Keeping a good watch on the changing Reserve Bank of India norms might be beneficial to you on a lot of levels. Foreclosing your loan by repaying outstanding proceeds in less than the decided time period saves you from making additional payments in terms of high-interest rates. The sooner your loan gets paid, the higher your credit score.
Check your home loan eligibility.
It is necessary for you to check your home loan eligibility before placing an application for a home loan. Documents linked with credit history, credit profile, and past repayment credit record hold utmost importance. Many financial institutions like Bank of India, Yes Bank, Bank of Baroda, Axis Bank, etc., provide their eligibility parameters for a home loan on their site. With financial institutions, for instance, you even can check your eligibility parameter before applying for a loan through the online medium by visiting its nearest branch.
Additional fees
Besides EMIs, there may be important charges such as processing, administrative or service fees that lenders charge on you at the time you place an application for a home loan. Ensure that you discuss all of these with the concerned lender before placing an application for your home loan. Check to see if they are just 1-time fees or charges or monthly. If they are monthly fees or charges, then you must consider them along with your loan EMIs to plan out your monthly budget accordingly.
Go through the documents well
Ensure to go through the loan agreement documents well for comprehensive and overall knowledge about the loan applications.
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