Finding the perfect home is important, but equally important is finding an ideal home loan. There are as many as 50+ lenders in the country who will be willing to give you a home loan. But, the important question is, whom should you take the loan from? Remember, the home loan you choose to take will require your financial commitment for a long period. Hence, here are a few tips for you to get the right home loan:
Begin by saving for the down payment
Planning your finances before you take a home loan is crucial. You should establish a monthly budget first, and accordingly start saving a certain amount of money. These savings will help you pay your down payment. The down payment may range from 2.25% to 20% of the purchase price of the home, depending on the type of loan you choose, and your lender.
A great way to save money easily is to have it automatically transferred to another bank account each month. This way you will not end up spending the money you wished to save.
Check your Credit Score
A good credit score attracts a great deal on home loans as it promises the lender about your credit worthiness. To get a good credit score, you must have a good financial history. To check your credit score, you have to get a copy of your credit report so that you can see how your credit profile looks like to the potential lenders.
Ideally, your CIBIL score should be more than 750 so that you are offered an attractive home loan interest rate. In case, your CIBIL score is less than 750, there are high chances of your home loan being rejected.
Make sure your financial documents are in place
When you apply for a home loan, there are a number of financial documents that you need to provide to your lender. Having these documents ready beforehand helps you accelerate the processing of your loan application. At a minimum, you should be prepared with a last few month’s pay slips, tax returns, and bank statements among the others.
Make use of a loan calculator
Home loan calculators are important tools for helping you understand how much you can afford. It enables you to calculate how much your monthly payment would be with different home loan rates, down payments, house price, etc. You should use it to figure out how much you should be borrowing considering your earnings. Use Indiabulls home loan calculator to know more.
Compare various offers
Don’t be fooled by loans with similar interest rates. There are other factors which make one home loan more expensive than the other. Make sure you understand all the different factors like fees, points, etc. that determine the loan amount for you.
Pre-qualification is a smart way to know how much you can borrow and what range of houses you should be looking for. Usually, your real estate agent may ask you for pre-qualification so that they can also have an idea of what to look out for. The process is relatively simple, and only requires some financial information such as your income, savings, and investments details.
Understand the various loan options
Your best friend may have an adjustable rate loan, your neighbour may have preferred a floating interest rate, but none of those could be the right options for you. Every home purchaser has their unique financial situations, and the type of loan that you pick should depend on your individual financial situation.
Maintain your credit score throughout the loan process
Do not assume that your lender will not recheck your credit score once it has been taken into consideration. They may pull your credit report again or before closing your home loan process just to check for additional changes. So, make sure you maintain your credit score thoroughly. Avoid taking any more loans, repay your instalments on time, and pay all your bills timely.
Read the documents carefully
While signing the document, make sure you read each clause written in the loan agreement. All the terms and conditions must be read and understood thoroughly before signing it.
Understand foreclosure norms
Last year, RBI banned foreclosure penalties. It is important that you know this while foreclosing your loan, so that you do not end up paying extra money.
GST Rate of 18% applies to All Financial Services w.e.f July 1, 2017.
So, observe the tips mentioned above while you apply for a home loan online or offline. Don’t rush into decision making, consider checking yourself eligible under the Pradhan Mantri Awas Yojana scheme (pmay) too and get the home loan that best suits you.