Buying a home has to be one of the vital decisions that you will ever make in your life.
But, if you are using the home loan facility to fund it, then you need to consider many things. It is because the housing loan is a big-ticket expense that is bound to affect your outlays for a long time.
Hence, if you don’t consider a few things beforehand, then it may become tough to get the loan approval and manage it later. Read on and check out the vital housing loan considerations to make!
- Your home loan eligibility
Before applying for the housing loan, you need to check if you have the required eligibility or not. You can do that by landing on the website that you want to apply for the loan with and check out the mentioned eligibility parameters. You can also use the home loan eligibility calculator on the website of the lender to do that. This way, you can know an amount that you will be eligible for. Your home loan eligibility will be made up of your credit score, repayment and employment history. A cibil score of 750+ is what lenders consider ideal to take your home loan request to the next level.
- Loan amount
You should check out the value of the property and the loan amount covered by your lender. You should note that no lender will sanction the 100% value of the price of the home that you wish to buy. The maximum will be 80%. The remaining 20% is what is known as the down payment that you will need to arrange on your own. The higher is your loan amount, the higher will be your down payment. Also, the home loan EMI that you will pay on the loan value may consume 40-50% of your monthly income. If you have some liabilities, then your debt to income ratio will be higher. In this case, you will find it tough to deal with other expenses in your life. To know an exact EMI amount that you will pay, it will also be suggested to use the home loan EMI calculator.
- The loan tenure
While applying for the home loan, you should try to go for a longer tenure. This way, you can reduce the EMI amount and it may help you manage other needs per month. The only con of the longer tenure is that home loan interest rate will be charged higher.
- The home loan rates and charges
The next thing is checking out the applicable rate of interest on the housing loan that you wish to avail. The best thing to do will be comparing all available offers on a third-party website and pick an offer that matches your needs and repayment the best. If you have a strong cibil score, then you may negotiate for a lower rate. It is also possible to save on interest charges when you go for a small tenure. It will also be worthwhile to know other loan costs like prepayment, foreclosure, processing charges and more.
- Never neglect the fine print of the loan
Many borrowers don’t go through the housing loan terms and conditions. If you are not aware of it, then you may regret the same in the future. Hence, you should always research to know what makes a good deal in the end.
- The location of the home that you want to buy
If your new home is located in a known area with growing infrastructure, then you can get the approval for a higher amount with an affordable rate of interest. If not, your loan amount may be lower with the higher interest rate. It is because if your home is in a prime location, then lenders may find it easy to liquidate the home to recover the amount. It is in the event of the defaults. The key considerations before the application of housing finance are now discussed. You can now assess your own profile and become loan confident soon.