Buying a house of your own is one of the most significant decisions. You check so many things in the process of buying a home like the locality, the material used in construction, the design of both interiors and exterior, etc.
Home buying is a big financial decision. Therefore, most people opt for buying a home with the help of a home loan.
While availing a home loan might look very easy and effortless with online buying options and home loan EMI calculator, it is easier said than done. It might look like when you step out to get a home loan, various banks offering home loans will approach you to lend you money, though it is not the case in reality. The lenders might offer you various options under the home loan section, but to avail it, you must fulfil their requirements.
If you are applying for a home loan for the first time, then do not worry. Here is a detailed checklist of things that you must keep in mind before applying for a home loan.
- Check the credit score – Any person who desires to avail any loan under the banking sector is expected to have a good credit score in order to avail the loan easily. When a person goes to any bank to apply for a home loan, the bank will first check his/her credit score. In order to avoid rejection and get the best offer on interest rates, the person must have a CIBIL score of more than 750. Keeping a healthy credit score isn’t that difficult. A person needs to make timely payments of his/her credit cards and existing loans.
- Check the rate of interest – Every person applying for a home loan aims to avail it at a low rate of interest, but to get it, he/she must find various offers and compare them to know which lender is offering the best deal. There are typically two types of home loan interest rates. One is the fixed home loan interest rate that is EMIs don’t change during the entire tenure. Another is the floating rate under which the interest rate keeps changing based on MCLR.
- Choose the home loan tenure carefully – Home loans come with the benefit of letting you choose the tenure of the loan. This decision must be taken carefully as the EMIs are calculated based on it.
Usually, people fall for the myth that longer tenure is better as the cost of the EMI decreases, but that’s not the case as the number of EMIs increases.
You can check this on an online home loan EMI calculator. Shorter loan tenure is beneficial for you. It also increases the chances of your application being approved easily by the bank.
- Calculate the home loan EMI – An equated monthly instalment or EMI is the amount paid by the borrower to the bank towards the repayment of the loan. Calculating EMI prior to choosing the home loan is vital as it helps the person know whether the loan repayment is in his/her financial capacity or not. The EMI amount depends on the amount of down payment you make. You can easily calculate the EMI on your selected loan with the help of an online home loan EMI calculator on the preferred bank’s official website.
- Check the processing fees – Processing fee is the fee that the loan borrower must pay to the bank after the application for a home loan gets sanctioned. Typically, this fee is 1% of the home loan amount that is disbursed, but this can differ from one bank to another.
Make sure you read all the offer related documents thoroughly before availing a home loan to avoid any unwanted surprises later on.