Your first job brings with it the first step towards becoming an adult as well as complete independence. The second step is to own your own home. Now it is not likely that someone who has just acquired their first job would also have the funds necessary to buy a home without a home loan. But is it a good idea to take such a big investment in the beginning of your career? Here are some factors to consider before taking the loan:
- Home loans are long term investments:
Other forms of loans like a personal or vehicle loan have only a few years tenure(anywhere between 5-7 years). However, home loan tenures often go on for 20-30 years, making them a long term commitment. As this is your first job, banks would be sceptical to approve a loan as they would not be sure how well you would perform in your job. Even if you are part of a reputed company, it does ensure the stability of your job.
- Job stability:
When banks gauge the credibility of the applicant, they want to see that the person has a good career, not just a good job. They want to make sure that you have regular income and a stable job. If a bank feels that you would not be able to repay the loan, they will not approve your application.
- Lack of credit score:
The lack of a credit score will greatly affect your chances of getting a loan. Banks do a complete financial check on you when you apply for a home loan and your credit score is a very important aspect of your financial history. Without one, banks have a very hard time gauging your reliability.
It is important to form your credit history by availing of a credit card and being prompt with your payments for the same within the billing cycle. Paying the credit card bill within the allocated billing cycle will help to build a strong credit score.
- Home loans are large amounts:
As compared to personal and vehicle loans, home loans are huge amounts which require a lot of time to pay back. Being a long term investment means that the person who has applied for the home loan must have planned for the future and how they would go about paying their EMIs. But banks too are very careful when granting such huge sums to individuals. Thorough checks are done on the background to make sure that the applicant is reliable in paying back the loan.
If you have planned for the future and are confident about your loan being approved, then applying for a home loan would be the best thing to do as you will have a lot of time to repay the loan.