A home is one of the most valuable assets you may own in your lifetime. No matter, if you are looking to buy a home for investment purpose or your own use, several financial institutions in India offer loan facility. A home loan is an excellent way to get the necessary financial assistance for purchasing the home. A home loan allows you to fund the purchase of a home without depleting your savings. Also, when you avail a loan, you can repay the amount in smaller EMI over 15-20 years.
But, before you start looking for the best home loan offer, you must take certain steps to complete the application process in a hassle-free way and repay the amount easily.
Do your research
Today, the lenders in India offer different types of home loans to suit the varying needs of the people. So, based on your needs, whether you want to construct a home on the land you own, or if you want funds for extending the house, you can opt for a home construction loan or a home extension loan. Also, you must be aware of other vital factors like the down payment, EMI, interest rate, and repayment tenure. Being informed about these factors will help you choose the right lender.
Keep it affordable
You may wish to purchase a big home or a home that is located in a plush location, but you must assess if the cost of the home is affordable for you. If the price of the home is high, you may have to apply for a higher amount, and consequently, repay a higher EMI. When you apply for home loan, you must consider your other expenses beyond the EMI, and choose the loan amount accordingly. Also, don’t forget to have a pool of reserve fund to meet any unforeseen expenditure.
Maintain a good credit score
Maintaining a good credit score is a critical requirement to apply for any loan. If you have existing dues like credit card bills or a loan, repaying the dues regularly on times has a significant positive impact on the credit score.
If you have been paying your dues on time, it reflects your repayment capacity and your creditworthiness, and the lender will be assured that they can recover the money you borrow. Typically, the lenders in India consider a credit score of 700 or more as an ideal score for approving a home loan. If you have a high credit score, you can use it to your advantage and negotiate with the lender to get a loan at a lower interest rate.
Know about the additional charges
Apart from the home loan EMIs, when you apply for a home loan, you may have to bear additional charges like loan processing fees, administrative fees, service charges, etc. So, make sure that you discuss this with the lender before submitting to your loan application. You must ask the lender if there are any monthly charges applicable or do they charge a one-time fee. It would help if you considered these charges while planning your monthly finances.
Know about the documents required and keep it handy
Every lender, no matter if it is a bank, an NBFC or a private lender, will as for certain documents before approving your home loan application. Make sure that you read about the documentation process of the lender where you wish to apply, and keep the relevant papers handy to avoid any delay in the approval process. The documentation process varies from lender to lender, but generally, the lenders ask for following documents
- Residence proof
- Identity proof
- Income proof
- Property-related documents
So, taking the right steps before approaching the lender for a home loan can help you get the loan approved without any hassles.