When it comes to taking a home loan for the first time, a borrower is often confused with many aspects related to such loans. Right from the interest rate, home loan eligibility, loan amount, to additional charges, there are several things to make the process confusing for the borrower. We have listed five useful tips to make the process easier for you.
Purchasing a home is a dream shared by millions of Indians. For most of us, a home is the biggest investment that we make in our lifetime. Needless to say, it is a home loan that allows us to turn this dream into a reality. However, when it comes to taking a home loan, the process is not readily understood by the first-time borrowers.
We have listed five important tips that are sure to make things easier for a first-time borrower.
- Eligibility Criteria
To get approved for a home loan, you’d be required to fulfill the eligibility criteria of the lender which usually vary slightly between lenders. Some of the most important considerations are your monthly income, your employer, job experience, and age. Make sure that you are eligible as per the parameters laid by the lender for quick loan approval. If you are falling short on the criteria, consider taking a joint loan with co-applicant as it increases your eligibility chances.
- Credit Score
Every financial institution in India now places a major emphasis on the credit score of the borrower. Your credit score is a summary of your credit history that shows how you have managed your credit in the past. You should have a credit score of above 700 to get approved for the loan. Lenders can disapprove your application even if you fulfill other home loan eligibility criteria but have a bad credit score.
- Shop Around
Make sure that you shop around to find the best deal on a home loan. As there are several lenders in the country, searching around for a while can help you get a home loan at a cheaper rate. Remember that the smallest of difference in the interest rate can have a significant impact on the total money you repay.
- Don’t Just Focus on Interest Rate
While the interest rate is surely the most important consideration, you should also check some other factors. Some of them include reputation of the lender, additional charges for the home loan, prepayment fee, penalty on missing EMIs, tenure of the loan, loan amount, etc.
- Read the Loan Documents
Last but not the least is reading the loan related documents before signing them. While going through the lengthy terms and conditions with complicated terminology can be annoying, it is very important to make sure that you know as much as possible about the loan to avoid any discrepancies in the future.
Make sure that you remember the tips mentioned above when applying for a home loan for the first time and hopefully the process will be smooth and quick.