A housing loan is perhaps the most convenient way to realise the dream of being a homeowner. However, proper homework is necessary on a prospective bo
A housing loan is perhaps the most convenient way to realise the dream of being a homeowner. However, proper homework is necessary on a prospective borrower’s part before applying for a home loan, primarily because it’s a long-term commitment. An unthought-out approach to this end can spell various hassles in the application process and the repayment tenor.
One may want to evaluate factors like their financial standing, earning prospects, and future obligations before applying. Selecting a suitable financial institution is also vital to that end, and options are best weighed by factors like home loan eligibility criteria, interest rates, loan amount, etc.
The following section elaborates on these pointers so you can have a better grasp of the process.
What are the pointers to keep in mind for a home loan?
Here are some of the factors to keep in mind to ensure seamless approval and repayment of a loan –
- Stable career and income
An important aspect you must consider at the time of loan application submission is your occupation. Loan officials will check if the applicant has a stable career. Usually, instant approval is provided to individuals with jobs at government institutions, MNCs, etc. or a business with a solid vintage.
Also, the lender will consider your earnings, existing debts, etc. They will consider your monthly income has a 55% – 60% surplus available for monthly EMIs. This is because home loans are a long-term liability, and it is due diligence on their part to consider your present and prospective financial capacity.
- Interest rates, additional charges, and fees
The first thing that you must consider is the interest rate on a housing loan. Therefore, you should conduct proper research on the institution you are availing a loan from. Try estimating the interest rate on the loan amount before sending your application. Also, take note that there are two types of interest rates – floating and fixed.
Floating rates keep on changing per the RBI policies, whereas fixed rates remain the same throughout the tenor. However, fixed rates are higher than floating rates. Make a call after assessing factors like present rates, anticipated changes in RBI policies, etc.
- Home loan tenor
When applying for a home loan, do consider the amount of time you will need for repayment. The home loan EMI and interest payable depend on this tenor period. A short repayment time reduces interest outgo but makes for higher EMIs. Conversely, a longer tenor will reduce EMIs but lead to increased interest outgo.
- Location of property
Many financial institutions take the distance of the property from prominent locations into consideration. The better the location, the more preferable it is for institutions to take such a property as a mortgage. It is because property within the city has more resale value than those further away. Therefore, check your property location before you apply for a housing loan.
- Credit history
Financial institutions also weigh an applicant’s credit score to determine their home loan eligibility. Your CIBIL score is an indication of your credit soundness. A poor score might lead to rejection. Make sure it is higher than 750 to be eligible for a home loan from a reputed financial institution.
For instant loan approval, do consider these aspects and others like a pre-approved offer. Avail such offers to make your housing loan application process smoother. These offers are also available on other products, including a loan against property. Check your pre-approved offers by providing your name and contact details.
Availing of a home loan isn’t a small affair. Therefore, consider all required aspects before you drop in at any institution for a loan. Also, do consider your repayment capacity as well, before you apply for a home loan.