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When you’re considering becoming a homeowner, apply for a housing loan only after researching the best mortgage deal available. For a borrower, this is easier said than done. However, making a checklist and following it can be of great help. The first step is to use free online tools such as a home loan EMI calculator to plan affordable monthly payments to ensure your finances are not strained throughout the repayment duration.
Several banks and financial institutions offer attractive interest rates and benefits when you meet the basic home loan eligibility criteria with the right set of documents required for home loan. However, it is up to you to compare their features and benefits. So, take a look at the key aspects you must factor in before you apply for a housing loan to fund your dream home.
Check the eligibility criteria of multiple lenders
Different lending institutions have varying eligibility guidelines for their housing loans. The main variables, when you apply for a housing loan, are the age brackets for the loan approval, along with the income requirements. This is because both are inherently connected to an individual’s earning capacity and their ability to make timely payments. Additionally, some lenders may also have specific city-wise requirements. Check for these as well to avoid complications and delays when you apply for a housing loan.
Plan for a higher down payment as per the LTV
Your loan to value ratio highlights the percentage of the current market value of the property that the lender will approve as a loan. Lenders will not offer 100% funding, which is why, you should be prepared to make a down payment. Generally, you may be required to pay 20% of the property’s value as a down payment, but you can choose to pay a higher percentage. By doing so, you reduce the sanction availed and lenders may be inclined to offer you a better home loan interest rate as it reduces the risk involved.
Maintain a credit score of at least 750
If your goal is to secure a low home loan interest rate, and it should be, then it is imperative that you have a strong credit profile. This means having a credit score of at least 750, alongside a clear repayment track record. Most lenders have a minimum CIBIL score requirement of 650, but simply meeting the bare minimum isn’t enough. However, with an excellent score of 750, you can easily qualify and may get access to special loan deals as well.
Know your preferred type of home loan interest rate
Lenders offer two kinds of home loan interest rates – floating rates and fixed rates. With the former, the interest rate shifts based on market fluctuations and is better suited for borrowers who don’t mind taking risks. The latter is ideal for risk-averse borrowers as the interest rate remains constant throughout, but it is generally a few points higher than the floating rate variant.
Choose the most suitable tenor
The repayment tenor of your loan affects your monthly payments. You must choose a comfortable tenor so that your EMIs are manageable and affordable when you apply for a housing loan. A shorter tenor usually translates to higher EMIs, and this could make repayment a problem in times of emergency. The right tenor ensures well-budgeted EMIs without pinching the pocket, making loan repayment easier to handle in all situations. In fact, online tools like the home loan EMI calculator help plan the loan effectively and with ease. Make sure to use it right from the application stage.
Understand the associated charges and the fee structure
Discuss all associated charges and the fee structures with the lender before you apply for housing loan. As a borrower, you will be charged a processing fee, in addition to other charges such as the EMI bounce charges, penal interest, loan statement fee, and a secure fee, whenever applicable. These charges will vary between lenders and should be discussed to avoid unexpected costs at the time of borrowing.
With this knowledge, you can choose the best-suited offering to finance the purchase of your home. To enjoy a truly comfortable experience, opt for the Bajaj Housing Finance Limited Home Loan. It offers favorable interest rates, a convenient and flexible repayment tenor of up to 30 years, a hassle-free refinancing opportunity, and a high-value top-up loan with easy-to-meet home loan eligibility parameters. To get started, apply online by filling a simple form.