For anyone who is planning to build or buy their own home, getting the finances in place can prove to be an uphill task, especially when the prices of real estate are at an all-time high. In such a situation, you need to seek a dependable source of credit, such as a Home Loan.
While all banks, online lenders, housing finance corporations and even non-banking financial companies offer these loans, getting a Home Loan at competitive rates is often easier said than done.
Since the investment involves a hefty sum of money, the lenders usually take into account your income and expenses, your financial health, your repayment history, as well as your credit score, amongst other factors to determine your Home Loan eligibility. Also, most lenders take the custody of the property, until after the loan is paid in full, as a measure to prevent frauds.
This, however, doesn’t mean that you should be disappointed. In fact, there are several measures which can help you Avail a Home Loan rather quickly, the best of which are listed below:
For you to avail a Home Loan at a somewhat reasonable interest rate, and in a hassle-free manner, it is critical that you enjoy a credit score of at least 650. Anything below it might alarm the lender of your less than average financial health. Hence, before you apply for a Home Loan, make sure to order a copy of your credit report, and check your score. If your score is less than 650, it might be a good idea to wait 4 to 6 months before you apply for the loan, and use the time to improve your score. An excellent way to do so is to pay all your bills on time, avoid Credit Card debts, and be regular with your equated monthly instalment (EMI) payments for any other loans that you may have.
This is yet another factor which plays a significant role in determining whether you qualify for a loan or not. As the name indicates, debt to income ratio is nothing but your total debt divided by your income. In an ideal situation, your overall debt should not be more than 40% of your income. In order to achieve the perfect ratio, before you apply for the loan, you should either try to reduce your overall credit or simply work to increase your income.
Most lenders would offer you only 80% of the value of your home as a loan, while you will need to arrange for the remaining 20% which will act as your down payment. Make sure that you have this amount arranged before you apply for the loan. Moreover, try to have as many funds as possible which can be used towards the down payment, beyond the mandatory 20%. Not only will this help you in reassuring the lender of your financial discipline, but will also ensure that you have to take a smaller loan, and consequently pay a lesser sum of interest. Some banks also offer up to 90% of the value of your home as a loan, hence, consider comparing various Home Loan offers from different lenders.
A Home Loan usually involves a substantial amount of money, often exceeding 10 Lakhs, and in a vast majority of cases upwards of 25 Lakhs. Needless to say, even with a long tenure ranging from 10 to 30 years, the EMI is high. For the bank to be reassured of your ability and willingness to repay the loan in a disciplined manner, it is essential that you can exhibit stability in your job. It is for this reason that it is strongly recommended for you to hold a position for at least 1 to 2 years in the same field of work, and preferably with the same organisation before you apply for a loan.
Make sure you do not hide or conceal any information from your lender while negotiating the terms of the loan. Right from your repayment history, to your current debts, divulge all the relevant details to your lender. Besides, you should also be honest about the bulk of your income. Doing so will instil the lender’s faith in you, and will create a hassle-free path for you thus ensuring a swift loan approval.
Getting a Home Loan can be much easier than it is posed to be. All you need to do is be prepared upfront, and be willing to exhibit your commitment towards this crucial life goal. Of course, a low debt to income ratio and a steady source of income can go a long way in ensuring that your Home Loan application is approved at the earliest possible!
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