When purchasing a home, two things come to mind: a lovely house and a not-so-pleasant but the frequently inescapable mortgage. The most important factor, though, is being approved for a mortgage. Lenders must carefully consider your repayment capacity, which is mostly determined by your income, expenses, savings, employment history, financial situation, loan record, and other debt payback. When going to apply for a housing loan, having a low credit score and past obligations, such as credit card problems, can be problematic.
Here are four crucial steps to check before applying for a home loan:
#1 Check Your Credit Score –
If you’re looking for a home loan online, apply on platforms that offer lower interest rates and other rewards. In addition to that, your credit score is one of the crucial factors determining your loan eligibility. Your track record of consistently making credit card and EMI payments will determine your score.
The credit history of your borrowings from various organizations, such as banks, NBFCs (Non-Banking Financial Companies), or housing finance companies, is essentially what the credit information report (CIR), which contains your credit score, is composed of (HFCs).
When a loan provider inquires, a reliable credit bureau creates and maintains your credit records and shares them with the banks and lenders. The likelihood of a loan being granted increases with the credit score.
Additionally, as a bonus, one can anticipate receiving the best interest rate on a mortgage. Make sure to verify your credit rating by at least six. Ideally, twelve months before you intend to purchase a property. A good credit rating will also help you in getting instant home loan approvals.
#2 Plan Your Budget, Down Payment, and EMI –
Establish your home-buying budget, the amount of cash you can spare for a down payment, and the size of the mortgage you’ll need. If your income appears sufficient, you can typically obtain a house loan for 80% of the property’s value. Determine the EMI range you are comfortable with before choosing the Loan’s term.
You can experiment with different possibilities using online EMI calculators to assist you with this. If your salary is insufficient, consider becoming a co-borrower with your parents or spouse.
#3 Required Documents for Home Loan –
It’s important to be aware of the essential paperwork and ensure you have it on hand before going to a bank or housing finance company to apply for a house loan. The following list of documents should be at your disposal:
- Pan card
- Aadhar Card
- Bank Statements for the past 6-12 months
- Last three months’ salary slip (if you are salaried)
- Application form with your photograph (duly signed)
- Income Tax Returns.
If all your documents are correct and require no further verification, you can easily avail of the best home loan at a very nominal interest rate.
#4 Check for the Right Banks and Lenders –
Many credit inquiries will hurt your credit score, so only apply to several lenders at once. It doesn’t mean you shouldn’t weigh your options, though. To speed up the loan approval process, find out which banks or housing finance businesses have already pre-approved the property where you intend to buy a home.
Recognize the requirements for eligibility with these lenders, including the minimum credit score and loan program (processing fees, interest rate, etc.). Then, before making a reservation for the property, please choose one or two lenders that best fit your needs and provide the cheapest home loan. Finally, get your Loan approved by them.
The best Housing Loan can be easily availed by the following financial institutions:
- NAVI
- Axis Bank
- ICICI Bank
- Kotak Mahindra Bank
- State Bank of India (SBI)
- HDFC Bank
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Go for Pre-Approval of your Loan:
Apply for a housing loan pre-approval before buying a house. Going for Pre-approval loans provides you with an understanding of your limit for spending and streamlines the search for your perfect home. If you have a Pre-approval loan, it will help you fetch a better deal and give you a higher negotiating power.
You can also ask the lender if there are any decent properties available in the area you choose. In fact, the lender has approved several projects, which not only relaxes the requirements for the number of property papers the lender needs but also gives you confidence in the calibre of the projects.
Check on your Eligible Credit Amount:
Depending on the customer’s eligibility, home loans can be approved for up to 30 years. The weight of the EMI is lighter, with a longer tenure. For instance, the EMI comes to Rs. 9,917 for an Rs. 10 lakh home loan with a 20-year term and a 10.40 per cent interest rate. The EMI now decreases to Rs. 9,073* if the term is extended to 30 years.
To cover the loan amount, you must obtain a loan cover term assurance plan. To locate the greatest home loan insurance available, it’s crucial to conduct research. This will save your family from the burden of a past-due loan because the insurance provider will pay it off in the sad event that something were to happen to you. In fact, a number of lenders will need insurance when you apply for a housing loan.
Know about all the Financial Regulations:
It is advisable to pay your EMIs on time each month. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 give lenders the authority to directly address default if a consumer misses more than three payments without court intervention (SARFAESI Act). It is best to inform your lender of your financial status and explore the option of extending the repayment term if you are having trouble making ends meet.
There are many advantages to technological advancements: you can pay your energy bills online, you don’t need to go outside to buy groceries or mail a letter, you don’t need to go to the bank to have your passbook or bank statement updated, etc. You can apply for a home loan online, which is another useful convenience.
How to Get approvals for your Loan?
Now, home loan companies offer a secure online platform for submitting a home loan application. Loan approval can be completed entirely online with the help of lenders like HDFC Home Loans. You don’t need to go anywhere to apply for a home loan in person. You can do it online.
Conclusion:
If you’re looking to apply for a housing loan, consider all of the aforementioned information, as it will help you be ready for your mortgage and increase the likelihood that your Loan will be approved quickly. Make sure to get co-borrowers ready to check their credit scores and keep their paperwork on hand if they are being considered as co-borrowers.