A Handy Home Loan Checklist for Millennials

Do you know India homes the largest millennia population in the world? That is, India is home to the largest young population in the world.

Who are Millenials? Millennial is a term that is used for individuals born between the years 1981 to 1996. Therefore, as of 2019, millennials are individuals between the age of 24 to 38 years. If you also fall into this category, then most probably, you have started working and have rather set yourself up for a decent career. There is one fact, though, that, unlike the previous generation, individuals from the millennial category do not like to wait.

Home Loan Checklist for Millennials

The go-getter attitude is what sets millennials apart from the rest. So, if, like your peers, you also have a steady job, stable income, and wish to become a homeowner soon, then you should start looking for the best Home Loan soon. Here is a handy Home Loan checklist that you can follow to identify the best Home Loan and ensure that your goal of becoming a homeowner becomes a reality.

1. Identify a suitable property

First and foremost, you need to identify a suitable property that matches your requirements. It will help if you pre-decide whether you wish to buy a constructed property or want to build it yourself. Then, various factors will go into consideration here, such as location, type, area, type of construction, amenities, and most importantly, availability of a Home Loan. Also, there could be some areas that are blacklisted by financial institutions for Home Loans, so avoid such localities for the best.

2. Shortlist a lender

After you have identified a suitable property, the next step is to look for the best lender who will offer you the best Home Loan. There are various types of lenders present in the market, like commercial banks, NBFCs, Housing Finance Companies, cooperative banks, etc. The interest rates, eligibility, quantum of loan, terms, and conditions vary across lenders. You must undertake in-depth research to select the most suitable lender for your requirements.

3. Select the type of loan required:

There are different Types of Home Loans to choose from. Therefore, your next step is to understand the type of loan you require.

Some of the most popular types of Home Loans that you can apply for are:

• Home purchase loan
• Home improvement loan
• Home extension loan
• Plot purchase loan
• Home construction loan

Depending on the type of property you wish to purchase and the lender you choose, you can apply for the best Home Loan as per your requirements.

4. Understand the application process:

The next point in your checklist is to understand the application process that you are comfortable with. With the rapid progress of technology, many lenders have started supporting online applications for Home Loans. You need to enter your basic details through the mobile app or website to submit your application. The representative of the lender will contact you for further process. Usually, this facility is offered by private lending institutions only. Otherwise, you can opt for the traditional in-branch application process where you will have to visit the branch office of the lender to complete your Home Loan application. Usually, public sector lenders offer this application mode only.

5. Calculate the amount required:

Now, calculate the amount you must borrow as the Home Loan. This calculation will depend on a number of factors, such as:

• Value of the property
• Type of Home Loan you opted for
• Down payment that you can afford
• Loan-to-value ratio followed by the lender

It is advisable that you make as much down payment as possible because it will reduce the amount of EMI you have to pay along with the total interest cost you will have to bear. Most importantly, you will be able to pay off the Home Loan as quickly as possible.

6. Look into the interest rate and EMI affordability:

Though Home Loan Interest Rates are amongst the lowest as compared to other forms of credit, the extended repayment tenor makes it a substantial liability. There are two types of Home Loan interest rates that you can choose from, i.e., the floating rate of interest and a fixed rate of interest. Floating interest rates are much lower than fixed interest rates and are, therefore, a better option for you. You need to hunt for the best deal on Home Loan interest rates as they are directly linked to the affordability of your Home Loan. Lower the interest rate, lower is the EMI, and lower is the interest rate and vice versa.

7. Check the available repayment tenor:

You must opt for a repayment tenor that offers you the EMI amount which you can afford but also ensure quicker repayment of the loan amount. The maximum available repayment tenor can go up to 30 years, but do not opt for the maximum tenor because you are eligible for it. Opt for the repayment tenor that will ensure quicker repayment of the Home Loan.

8. Compare other charges and APR:

In addition to the Home Loan interest rates, you should also have a look at the Annual Percentage Rate (APR).

APR is a better measure of the affordability of the Home Loan as it includes various charges that you will bear in a year. Processing charges, part prepayment charges, and foreclosure charges are some of the expenses that you must have a look at.

9. Explore the repayment options:

There are different repayment options available from various financial institutions. You must explore before signing the dotted lines. These are:

• EMI Holiday
• Step-up EMIs
• Savings Account linked Home Loan
• EMI waiver

These repayment options come with their Pros and Cons but certainly warrant your consideration.

10. Prepare the documents required:

Though the specific documentation requirements vary across the lenders, you will probably need to arrange for the following documents:

• Income Tax Statements for the last 3 years
• Bank Account Statement for the last 6 months
• Audited financials for last 3 years (for self-employed applicants)
• Loan repayment track-record
• Form 16 for last 2 years and salary slips for the last 6 months (for salaried applicants)
• KYC documents (Aadhar Card, PAN Card, Voter ID, Passport, etc.)
• Property chain documents
• Property tax receipts
• A completion certificate from the builder
• Other documents as required by the lender

Also Read: Home Loan Checklist: 7 Questions to Ask Your Lender

To apply online for Best Home Loans in India,  Secured Loans and Unsecured Loans, visit MyMoneyMantra, the leading online lending marketplace that offers financial products from 100+ Banks and NBFCs. We have served 7 million+ happy customers since 1989.