Owing to the complex loan terminologies and long and tiring paperwork, availing a home loan for the first time can be a nightmare. You have to take every step cautiously to avoid making an expensive mistake. But worry not, we are here for your help. If you are looking forward to availing a home loan for the first time, here is a home loan guide to help you make an informed decision and having a hassle-free loan buying experience.
Choose your Lender Carefully
You would get a lot of options when it comes to lenders who offer home loans. But it is important that you choose the right lender after due diligence like comparison and research. It could be surprising for you to know that the cheapest loan is not always the best. Many other factors like turnaround time, customer service, or after approval services are also critical. Do not just get lured into availing a lowest
Interest rate is one of the most important factors that you should consider when applying for a home loan. There are two types of interest rates on a home loan; floating and fixed. If you opt for a fixed rate of interest, there will be no change in your interest throughout the loan tenure. On the other hand, the floating rate of interest is based on market trends and can increase as well decrease as per the changes in market rates. While you look for a home loan, compare interest rates offered by various banks to get the best deal. Remember that the interest rate is deciding factor that determines your EMI amount. You can calculate the EMI you will have to pay towards the home loan by using the home loan eligibility calculator that takes into account the interest rate, principal amount and the loan tenure.
Check your CIBIL Score
Lenders have specific eligibility criteria according to which they approve your home loan application. One of the important eligibility criteria that lenders check on when determining your home loan eligibility is your credit score. Your credit score is an indicator of your repayment capacity or creditworthiness. The better the score, the higher are the chances of getting your home loan approved. A credit score between 650 to 750 is considered to be a good score for a home loan. However, the nearer your score is to 900, the more faith your lender would have in your creditworthiness.
Do your Research
Taking a home loan could be very complicated for the first time. There are a lot of home loan terminologies that you might not know about. It is suggested that before you apply, do thorough research on home loans. Study about the different charges like foreclosure, service charge, processing fees, etc. Once you have a fair idea about what these terms mean, it would be easier for you to get the best offer by comparing different home loans.
Keep your Documents Handy
Often the loan process is delayed due to incomplete documentation. To avoid this and expedite the process, keep all documents handy. For a home loan, you would need to submit copies of your proofs of address, age, identity, income, bank details and educational qualification along with the application form. You might need to submit some more documents depending on the requirements of the bank you choose. Check with your bank beforehand so that you have the documents ready when you apply for a home loan.
While you start looking for the best home loans, ensure that you are financially sound to make timely repayments. The amount of loan you are planning to take must be financially feasible for you to repay. Check your current liabilities, ascertain your EMI with the help of a home loan EMI calculator and then pick the best home loan. Good luck.