Factors to Keep in Mind before Applying for a Home Loan Today
Home loan lenders in current times extend competitive offers and deals, incentivising borrowing with attractive terms.
New Delhi: The decision to buy a house is exciting, especially when it’s your first real estate purchase. Owning a home is a common aspiration and is often a sentimental decision for most of us. The move to buy property must also be deliberated as it is a monumental purchase that requires a significant financial commitment that can span up to almost 30 years of an individual’s life.
Even if you have enough stored away to finance a property purchase, it can be hard to shell out such a substantial sum at one go for both the property down payment and the rest. In such cases, buyers can always rely on a home loan – a handy financing option allowing you access to large sums at reasonable interest rates, so your dream property is within your reach without any budget constraints.
Home loan lenders in current times extend competitive offers and deals, incentivising borrowing with attractive terms. However, to be eligible for such offers, borrowers must meet the minimal requirements lenders have, which help them assess the borrower’s risk profile and repayment capacity. To be able to meet the lender’s home loan eligibility criteria, you should carry out a few activities pre-emptively to ensure maximum chances of Home Loan Eligibility and approval. This article helps you track the factors to bear in mind before you apply for a home loan so you ensure high eligibility and other home loan perks.
Factors to Ensure Maximum Home Loan Eligibility
Prospective borrowers can embrace several credit health measures to help boost their home loan eligibility. It will not only improve your chances of getting approved for a home loan sum that you want but will also help you avoid home loan rejections – an act that negatively impacts your current credit score.
Research Your Home Loan Options
The first step of your home loan application journey should be a thorough assessment of your financing needs and shortlisting lenders most likely to address your monetary requirements. This process will also help you sidestep lenders whose offerings don’t align with your needs, thereby minimising the chances of home loan rejection. Lender analysis and comparison are also crucial to scout for the best offer in the industry, as per your eligibility.
Aim for an Affordable Repayment
When you settle at a home loan amount, you should try and keep it within your repayment capacity, as borrowing a disproportionate amount could lead to difficulties in repaying the home loan amount. Take stock of your savings and consider making a larger down payment to reduce your home loan requirement. It will not only bring down your total cost of borrowing but also minimise the risks of defaulting or delaying payments from your end.
Boost Your Credit Score to 750+
Lenders rely on your credit score to assess your income profile and repayment capacity, so having an ideal score of 750+ will bode well for your home loan application. The CIBIL score summarises your repayment history, income and financial obligations, ongoing debts, and credit utilisation ratio, letting the lender estimate how much you can accommodate in your repayment budget to pay back the home loan amount. If your credit score is not up to the mark yet, consider clearing off your pending dues to improve your CIBIL score before applying for a new loan.
Be Smart About Your Repayment Tenor
The repayment tenor you choose can determine a lot about your repayment strategy – the size of the EMIs, total interest outgo, and the time you take to repay the loan amount. Home loans usually allow a lengthy tenor, giving up to 30 years for the borrower to repay the loan amount. While this ensures borrower comfort, it can cost them more in terms of interest. Some borrowers can consider opting for a shorter repayment tenor, even if it means bigger EMIs. A shorter repayment tenor can help you save substantially as you avoid paying interest for the extra months you may otherwise take to repay your home loan.
Besides keeping these points in mind, home loan applicants can also use a home loan EMI calculator to arrive at their ideal home loan amount, calculated after trying several combinations on the tool.
(Above mentioned article is a consumer connect initiative. This article is a paid publication and does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever.)