Things to Know Before You Raise Your First Home Loan
If you have been thinking of taking a loan to build the home of your dreams, this is probably the best time to do so. With real estate prices going up by the day, and with the choicest of properties being sold at an unprecedented rate, you ought to act fast.
Of course, you may be compelled to think, that you are not financially ready to pay the humongous amount that a house of your choice will cost. Thankfully for you, there is a wide range of Home Loans from which you can take your pick. As you may know, taking a Home Loan has become easier than ever before. However, if this happens to be your first time taking credit as substantial as a Home Loan, it is in your best interest if you are well-prepared in advance.
Not only will this preparation increase your probability of getting a quick approval, but will also help you be aware of any glitches that you might face while Applying for Home Loan.
So, without further ado, let us start with our list of things that you must know before you raise your first housing loan.
1. Have Your Documents Ready
When you approach a lender for a Home Loan, it is highly likely that you will be asked for a few documents, including but not limited to:
- Your recent salary slip
- Your job continuity proof
- Your tax filings for the last two years
- Original property papers
- Your bank account statements for the last three months
2. Understand Your Financial Standing
As a rule of thumb, you should not be paying more than 40% of your monthly income after taxes towards all your loans clubbed together. Hence, if you have a monthly income of Rs. 50,000, ideally you should not be paying equated monthly instalments (EMIs) exceeding Rs. 20,000 else it will start deteriorating your quality of life. Most lenders will calculate your loan eligibility based on this factor. Every lending institution has its own guideline based on which it makes the final call.
3. Know Your Builder
More often than not, banks are beware of builders and projects which have failed to deliver as per their promise in the past. Hence, if you want a loan for a flat that sits in a project with a tarnished reputation, your bank may not be willing to approve your application. In such a case, it is best to approach the bank or lending institution which the builder has tied up with.
Then again, for your loan application to get approved, it is important that the property of your choice is located in a recognised locality of your city. An ideal location ensures the bank that if in case of default from your end, the bank will be able to raise the amount of the loan by selling off the property.
4. Assess Your Credit Report
Take a close look at the copy of your credit report before filing a loan application and check your score. In order for you to get the loan swiftly, you will need a minimum score of 650. In case you find any discrepancy in the report, which is a common occurrence, get the mistakes rectified.
On the other hand, if you have a low credit score, it is advisable for you to wait for 4 to 6 months and build your score, before applying. Pay your bills and existing loans on time to improve your credit score. This will help you in getting a quick approval and competitive rates. Trust us, the wait will be worth your while, as it will help you get a cost-efficient loan, thus helping you save thousands and lakhs of rupees in the long run.
5. Pay Off Existing Debt
As discussed earlier, lenders consider it healthy for your finances, if the total of your EMIs does not exceed 40% of your monthly income. In order to make the most of this unsaid rule, it is best to pay off all your existing debts, such as car loans, Personal Loans, and any significant Credit Card bills, before applying for a Home Loan. This will lead the lender to consider you financially strong, thereby helping you get a seamless approval, while also ensuring that you can have access to a higher loan amount.
We hope that you are now well-informed on all the steps that you need to take before raising your Home Loan. So, wait no more before you file an Online Home Loan Application. Thanks to the easy application process, and quick processing, chances are that your Home Loan will get disbursed within a matter of just a few days. Now, that is what’s known as a convenience at its best!
Also Read: 5 Best Home Loans for Pensioners
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