Buying a new house is an exciting and commendable feat for most of us, especially if the house is our first. Not only does it hold considerable sentimental value, but it also requires a sizeable financial commitment. Property prices can be steep, no matter how much one saves, and most of us need financial assistance in making our dream of owning a home come true. Several factors are tied to buying a house, so it is only right that one prepares for it and does it well.
With the easy availability of credit tools such as a home loan, owning a home – even a little pricier than anticipated, is achievable. Home loans grants access to sizeable funding, going up to crores, allowing borrowers their choice of property without penny pinching, and ample time to pay the sum back – comfortably, at their own pace.
Borrowing a Home Loan
However, as attractive as the benefits of availing of a home loan are, one does have to ensure maximum eligibility to be able to access these. Home loans are a long-term financial commitment, and lenders assess the borrower’s financial profile before extending large sums for home-buying assistance. The good thing is that the home loan eligibility criteria are simple and rudimentary – not too different from the tenets of basic financial health, and if one can meet them – they benefit from all the home loan features.
This article details all the necessary steps aspiring home loan borrowers must adhere to, to get the best home loan deal they are eligible for – to buy the house they dream of.
Before Applying for a Home Loan: Checklist
There are certain factors to take care of, before applying for a home loan. We can call this the preparatory phase, which helps you sharpen your application and financial profile to match the lender’s mandatory home loan criteria. While these are usually easy to meet, having some basic checks in place will make this process smoother.
Check Your Credit Health
Lenders always rely on your credit profile and CIBIL score to draw an assessment of your repayment capacity, income and financial stability and old repayment habits. Typically, lenders prefer applicants with a CIBIL score of over 725, as it speaks well of your financial habits and credit utilisation.
If you find that your credit score is not up to mark, consider investing time in boosting your score before applying for a home loan. There are several corrective measures one can take, such as clearing pending dues, reducing ancillary expenses, and paying their EMIs on time.
Research Lender Options
Just as your lender assess your financial profile, you should also assess your choice of lenders before zeroing in on one. The home loan market is extremely competitive, and lenders go out of their way to make lucrative offers to eligible applicants. However, as appetising as these offers may be, applicants must first assess how well the lender can match their funding requirements and whether they are a good fit to become their housing finance partner.
It is also important that you choose a lender who is most likely to approve your loan application, as loan rejections not only deter your home buying plans but can also negatively impact your existing credit score.
Enhance your Eligibility
The foremost thing that applicants should consider before applying for a home loan is their eligibility for a home loan. It includes their financial health, but also some other factors such as:
- The loan amount they are eligible for
- The size of their property down payment
- Their future financial goals and ambitions
- Their age: how close one is to the lender’s maximum age limit for sanctioning a loan
Applicants can use a common home loan eligibility calculator or an EMI calculator to assess whether their home loan ask is reasonable and is a financial undertaking they can service in comfort. You can also consider applying with a co-applicant if your eligibility criteria fall short of the lender’s benchmarks to boost your chances of being approved for a home loan sum of your choice.
Applying for a Home Loan
Once you’ve chosen our home loan lender, the process for a home loan is easy to complete. Here are the things you need to do for a successful home loan journey.
Fill Application Form
Most lenders today offer an online home loan form that applicants can fill in matter of minutes. The form requires identity, income, and financial details, which you should provide accurately, so nothing gets flagged at the time of checking.
Pay Processing Fee
Lenders request a nominal processing fee to process your home loan application. This fee is non-refundable and is used towards assessing your home loan application. One must ensure that they pay this fee, to avoid an automatic rejection.
Keep Necessary Documents Handy
You will need to submit a set of documents to support your home loan application. While most lenders require minimal documentation, it is important that you meet those adequately, to cement your position as a bankable applicant.