CreditMantri matches your credit and demographic profile to lender's Home Loan lending criteria - others just match your demographic criteria. We shortlist lenders willing to lend to you based on our proprietary matching algorithm.
In effect, we pre-screen your application to make sure you are likely to qualify as per the lender’s credit criteria. We upfront check whether you qualify for Home Loan. Hence the chances of your Home Loan application getting approved is higher.
Everyone dreams of having their own place in the world, a home they can come back to from work, a home in which they can start their own family, but for many ‘a home’ remains a dream because of a lack of capital. Here is where banks and other financial institutions come to the rescue with home loans, which would help realize your dreams.
Your housing needs are not the same as the person next to you, the home loan could be for a brand-new apartment, or to renovate your ancestral property or even build that extra room that you have been wanting for long. Read on to know more about the different loans that would meet your requirement.
There are various kinds of home loans available depending on your specific housing need:
In order to be eligible for a home loan, you need to be
You must satisfy the age and income requirements and be able to demonstrate a stable income.
If your spouse is salaried, then you can add him/her as a co applicant and this income will be considered while determining your eligibility for the loan.
Lenders look at several factors while determining the state of your housing loan application. They include the following indicators:
Your credit score: Typically, you need a minimum credit score of 750 for lenders to proceed with processing your application. A credit score of 750 or above reassures lenders that you are a responsible borrower and have a good track record of making repayments.
Your credit report: Lenders look closely at the applicant’s credit score and credit history. They check your payment history over the years to see if you have a record of making payments on time and in full over a long period. They also check for any written-off accounts in the past to see if you have defaulted on any prior debt obligations. All these indicators of poor credit behavior are red flags for lenders, even if your current credit score is adequate. They will also look at your existing loan obligations to see if you can take on additional debt payments on your present and predicted future salary.
Employment status and salary: Lenders want to be assured that you will have a steady monthly income to pay off your EMIs over the loan period. The tenure of a home loan can stretch for decades and lenders want to know if you have a high probability of steady employment and income during that period.
Clean title deed and complete documentation of the property: While this requirement is not related to your individual credit situation, banks want to ensure that there would be no issues with the collateral (the home) in the event of a loan default. They will first make sure that all the legal documents relating to the property are in order.
The loan amount can go up to 85% of the value of the property, but this is a variable figure depending on your credit background. How much the bank/financial institution decides to lend you depends on, among other factors, your existing loan obligations and your ability to take on further debt and service it over the long duration of the loan.
Similarly, the loan period depends on how your lender views your present and future ability to fulfill all your debt obligations. They will look at your current loans, your age, salary at the time of taking the loan, and your projected earnings for the tenure of the loan. The tenure for a home loan can range from 5-30 years.
There are two basic types of home loan interest rates and you need to study all the interest rate options carefully before deciding which one to choose:
Fixed rate: An interest rate is fixed for the entire tenure of your loan and you should pay a fixed EMI for the entire duration of the loan.
Floating rate: The interest rate you pay varies during your loan tenure, depending on external market conditions. You would choose this option if you are confident that interest rates will go down during your loan period.
There is also the option of a partially fixed and partially floating rate. You need to learn about all kinds of housing loan interest rate options or consult a professional to see which option suits your needs the best.
In order to land the lowest home loans interest, you need to have an impeccable credit history.
EMI stands for Equated Monthly Installment. It is the amount you need to pay monthly to repay your entire loan. If your loan period is 20 years, then you will be paying an EMI every month for 20 years.
EMI consists of principal plus interest due, spread over the entire tenure of your loan. If your EMI burden is too high, you can reduce it by lengthening the tenure of the loan. However, if you extend the tenure of your loan, you will be paying out more in interest amount since your repayment obligation is over a longer period.
You can use a home loan EMI calculator to find out how much your monthly outgo will be.
The documents required for a home loan could include (among others): all the legal documents pertaining to the home that is to be purchased like the title deed, all the necessary legal approvals etc.; identity proof, residence proof, age proof, salary slip of the past few months; past income tax returns; and bank statements. The documents required will vary based on the lender requirements.
Buying a home can create a significant outflow in addition to the actual cost of the property. There are two kinds of expenses associated with a housing loan:
At the time of purchase: You need to keep in mind that you will have to pay registration charges, stamp duty and transfer charges.
At the time of loan disbursal: Banks may charge various fees including processing and application fees. It is useful to remember that some of these bank fees can be negotiated. However, the good news is that there is no longer a pre-payment penalty for paying off your housing loan before the end of your loan period.
It is very difficult to get home loans with bad credit. Lenders do not want to risk giving loans to customers who do not have a good credit repayment record. However, each lender has a different set of requirements and criteria for lending. So it is possible that even if multiple lenders reject you, you might have a small chance to qualify with another lender who has different requirements.
Generally, if you have a credit score of less than 750, it is difficult to get approved for a loan. The borrower must consider credit improvement schemes if he/she is having a poor credit score and wishes to go for a home loan soon.
If your loan application is rejected by multiple lenders because of your poor credit record, each rejection will incrementally affect your existing poor credit score. Even if your application is approved, despite your poor credit record, you might be given a higher home loan interest rate, shorter repayment period, or a smaller loan amount which might not be enough for the home that you are considering. You need to concentrate on improving your credit score to at least 750 before applying for the home loan that is best for you.
The best home loan is easily the one which suits your budget and doesn’t restrict your cashflow. The best way of choosing a home loan provider is to do research on the various offers available in the market and decide which one is the best home loan in terms of interest rates, fees, and other features and benefits. You can refer to legal or technical experts for advice or counselling on specific areas that you might not understand or might not be familiar with. Above all, do not hurry on a home loan decision since your choice can have consequences stretching to decades.
You can check your eligibility and apply for a home loan by signing up with CreditMantri. It is quick, simple and above all, free.
CreditMantri matches your credit and demographic profile to the lender's lending criteria and presents you a shortlist of only those lenders willing to lend to you based on your unique credit profile. In effect, we pre-screen your application to make sure you are likely to qualify as per the lender’s credit criteria. Hence the chances of your loan application getting approved is higher.
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