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Important Tips to Consider Before Taking a Home Loan
- Updated on: 18 Sep 2024
- Published on: 27 May 2016
Getting a home loan on salary offers a great way to finance the purchase of your dream home. The increasing real estate prices can make buying a house an expensive ordeal and accumulating the required wealth can take years. But when you apply for a home loan, you can get your dream home without any wait.
However, simply knowing how to apply for a home loan is not enough. You also need to understand the nuances of this borrowing to ensure you make an informed decision. So, read on to learn some crucial tips you should remember while getting a home loan.
Also Read: Home Renovation Loan
Here are some tips to remember when you apply for a home loan online:
1. Stable income and employment
Firstly, to get a home loan, you need a decent salary and a secured job. You should be regular with income tax payments and filing of the returns. You should also get your Form 16 from your employer.
2. Maintain a healthy Credit Score
Having a good credit score while applying for a home loan is crucial. The financial institution may reject your loan request without a good credit score. You should pay your debt before the due date to maintain a good credit history, which can help increase your credit score.
3. Select a suitable loan option
You also need to keep a check on any other loans that you have applied for and taken. Financial institutions monitor your capability to repay. For example, if you have taken many loans that occupy 50% or more of your salary, you may find it difficult to repay them.
4. Get a mortgage banker
You need to get a mortgage banker involved in the process of selection of loans.
There are innumerable loan options that the lender provides and a mortgage banker helps make faster decisions with efficacy.
5. Provide documents and details
As mentioned, financial institutions evaluate your repayment capabilities. These are generally included in the list of documents required to apply for a home loan. The lenders also ask for your investment data. You need to share the details of your bank account/s, post office savings schemes, insurance plans, employment details, etc.
If you are a freelancer or self-employed, you need to give the details of your income, income tax return and balance sheets, among other documents.
6. Choose the right property
It is very important to assess the kind of property that you choose to get a loan for. It may become a little difficult to get the loan sanctioned if the property is a resale property of age 10-15 years. The financial institutions also evaluate the construction stages of the property.
7. Keep the down payment ready
While applying for a home loan, you need to be ready with the down payment. Most banks give an allowance for eighty-five per cent of your loan. You need to pay the remaining amount as a down payment. So, make the necessary arrangements to have the required amount ready.
8. Choose the right tenure
The repayment time is also an essential factor to contemplate. Most lenders allow you to choose the timeline to repay your loan. But while deciding the time limit, you need to consider the fact that a longer repayment period will lead to lower EMIs but higher rates of interest.
9. Involve a guarantor
The financial institutions do not press on the need to have a guarantor. However, having a sense of guarantee leads to an increment in your credibility. Also, there are cases where it becomes mandatory for you to have a guarantor.
The guarantor could be your friend or family and he/she takes guarantee in the legal space. Note that the guarantor also needs to meet the lender’s eligibility criteria. Remember, in case you become delinquent and are unable to pay back, then it is your guarantor’s responsibility to repay the loan.
10. Apply with your spouse
If you apply for a certain loan amount and it is not getting sanctioned, then you can choose to apply for the loan with your spouse. The chances of getting approval on your home loan increase this way as the lender will also consider your credit profile.
11. Get an appraiser
Having an appraiser in place helps all the parties aware that you are paying a reasonable price. The financial institutions arrange for an appraiser who essays the role of a third party. The appraiser evaluates and gives an estimate of the value of the house that you intend to buy.
Remember, at the end of the process, there is certain paperwork that you need to complete. It takes a few days for the lender to fund your loan after the completion of the paperwork. As such, the whole process can take some time and you should apply accordingly.
If you simply plan to get funds to renovate your home, you can get an Instant Personal Loan online. With Fibe, you can get a loan of up to ₹5 lakhs instantly with minimum documentation. Download the Personal Loan App or go to our website and apply for quick and hassle-free personal financing.
To close your home loan before tenure, you need to reduce your outstanding balance. For this, you can choose any of the methods:
Remember, the lender may levy some charges if you plan to close the loan early. Be sure to consider this and other terms before proceeding.
Banks offer preapproved home loans to customers based on their repayment capacity. Therefore, you must have a good credit score and a steady income to get preapproval on your home loan. You can check your offer from the lender’s website.
To reduce your home loan EMI, here are some points that you must consider:
There are numerous financial institutions offering competitive home loans. You can choose one that offers the best deal for your current and future finances. Once done, you can apply online or offline, as per your preference.
