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What is the procedure for applying for a home loan?

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Below are some points that you must consider before taking a home loan: 1. Know you loan eligibility: The loan amount to be sanctioned depends a lot upon previous record of repayment of loans and credit card dues and also upon your income. How much money you can spare to pay the installment from your stated income? Before taking loan, you must be give a good thought to the installment that you are willing to give out each month. Generally a loan up to 80% of the total cost of the property is approved by banks, but that is not sacrosanct. 2. Check your credit score: Check your CIBIL score. The CIBIL Score is in the range of between 300 and 900 points. The score is evaluated on the basis of your credit card bill payment history, existing loans or liabilities, loan repayments and how many times you have applied for loan till date. If you are paying the processing fee to at least three to four banks to know your maximum limit, then you are considered 'credit hungry' in the eyes of CIBIL and your chances of getting the loan reduces. 3. Choose your lender: Do a thorough research to find a suitable lender such as a bank or financing company for your home loan. Take the guidance of experts so you are able to make the best decision. 4. Type of interest rate: There are two types of interest rates on loans - one is fixed rate and other is floating rate. In home loans with fixed rate of interest, the amount of each installment do not change throughout the duration of repayment, while in the home loans with floating rate of interest it changes along with the change in interest rate. It is wiser to have home loan with floating rate if the interest rates are expected to go down in near future. 5. Tenure of loan: The longer the tenure for the loan, the smaller will be the EMI amount, and vice-a-versa. So weigh all options before you take a final decision. 6. Know about extra charges that need to be paid: Get the complete information about all the extra charges that you will have to pay to take a home loan like processing fee, service and administrative fee, etc. These charges are included in the loan amount that is actually sanctioned to you. 7. Read the document of agreement: Read the complete loan agreement carefully before signing it. They can be quite a handful to read, but take your time and read every word carefully to ensure that all the terms and conditions are the same as what you agreed upon.".

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