If you dream of owning your own home but wonder if you will be able to ever afford it – worry not! The overwhelming majority of home owners need that extra support of a home loan from to help them fulfill their dream. Owning a home is the ultimate dream of almost everyone and very few have the financial means to achieve it. That is where a home loan can help you.
The market is flooded with innumerable home loan offers and it is easy to get confused about which product is the best one for you. Before applying for a home loan, there are few things you must be very careful about.
Taking a home loan means committing a significant chunk of your monthly income towards paying off your loan – principal amount and interest included, month after month, for a substantial number of years. Ask yourself this question – are you ready for this commitment which requires meticulous planning of your finances? If the answer is a Yes, then you need to do the following:
Pull Out Your Credit Report
Once you have decided that you will buy your house, you need to obtain a copy of your credit report from the Credit Bureaus. Typically, you need to have a credit score of 750 and above to qualify for a home loan. You may be accepted for a loan below that score too, albeit at unattractive terms like a high interest rate. It is better to have a good credit score before you apply for a loan to avoid loan rejection and to qualify for the most favourable terms and conditions.
If your credit score is low, make a commitment to improve it before you put in your loan application. While you are researching properties and identifying the ideal home, use that time to increase your credit score. It can take anywhere from a couple of months to a year to improve your credit score, depending on the severity of your credit situation.
Ok, got it. What next?
Shop around for the property that suits your budget and lifestyle needs while you are working on your credit score. Make sure to check the background of the builders and promoters. You don’t want to find yourself in a legal fix after having paid for your house. It might make it easier if the property you are considering in your bank’s list of approved builders/developments.
Simultaneously, shop around for the best interest rate possible. This is extremely important, as even a 0.05% reduction in the interest rate could mean savings of a significant amount of money in interest costs. Thought it may sound tedious, take care to go through the fine print on the terms and conditions. Have clarity on all the fees and charges involved with the home loan and the repayment terms, so that you can make an accurate estimate of your potential outflow. You can use an online EMI calculator to determine what your future EMI burden will be. Take time to determine which home loan offer best fits your income and credit profile.
I think I have decided on a lender, what next?
Apply for a home loan! Once you have finished with the research on the home loan that best suits your profile, it is time to apply. You can walk in to the nearest branch of your chosen lender and apply along with all the supporting documents or you may consider applying online and uploading the required documents. It is possible to track the status of your application online as well, although this facility is not available with all lenders.
Alternatively, if you think you need help with identifying the most suitable loan offer, advice on eligibility, and assistance with the loan application, CreditMantri can guide you through the entire process and match you with the loan that suits your credit profile the best.