A housing loan or home loan can be explained as a credit provided to the borrower for purchasing a home. Banks and other lending institutions charge a specific interest rate on the total amount lent. The borrower must pay Equated Monthly Instalments (EMI) to repay the loan amount during a pre-decided tenure. The home purchased also acts as a security for the lending party in case of housing loan. Getting a home loan might seem like a tough nut to crack, but it can be straightforward with the right approach. Here are some practical tips to help you with your home loan process:
1. Assess your financial situation
The first step to smoothen the loan process starts with being more aware of your finances. You need to evaluate your present financial situations to figure out what type of property you can afford. Besides this, you need to make sure that your home loan EMI falls between 40% to 60% of your in-hand salary, in case you are a salaried professional. It would help if you did not put yourself in a situation where you can’t afford your general living expenses after paying the home loan EMI.
2. Evaluate your options
Before you apply for any home loans, make sure that you have gone through all the options at hand. Multiple service providers in the market can lend you the money to purchase a house. However, you should be mindful of the interest rates charged on these loans and make the best pick as per your needs and budget. Many lending companies also provide you with an option to apply for a home loan online using their web portal. It is prudent to opt for the online application option during the pandemic.
3. Find out your CIBIL score
Your CIBIL or credit score plays a vital role in the loan application process. People who have a higher CIBIL score enjoy premium benefits, including lower interest rates and faster loan processing. Most lenders will keep a tab on your CIBIL score to evaluate your repayment history. It would help if you always tried to maintain a CIBIL score of more than 750 points. This will also reduce your home loan EMI.
4. Documents check
If you don’t want to drag your loan application process and want faster resolutions, keep all necessary documents ready. Do your research about what all documents will be required to process your home loan application. You should always consult with a housing loan provider regarding the documents needed. This will also help you figure out any tax redemption schemes that you can benefit from.
A healthy negotiation can open new doors for you. This also applies to your home loan process. You should always read all the terms and conditions before you signing the papers. If you are not clear on any terms, then try asking your loan supervisor about the same. If you feel that some terms are not suitable for you, try negotiating with your lender.