Tips to Prepare Yourself Before You Take a Home Loan
Taking a Home Loan is a big step in anybody’s life. Every thought about loan repayment brings a sense of responsibility and maturity in an individual. A Personal Loan is a different thing, on the contrary, buying a home is a considerably high investment. You have to plan before applying for a Home Loan. Mentally, you need to be alert of the pressure that the debt may pose on you and economically you need to plan your finances. The documents involved would also need your attention, but planning to establish a financial disciple is crucial than everything else. Wondering how to prepare for making the dream of owning a house come true? Here is all the help you may need.
1. Manage Your Credit Report
Pa all your previous debts or late payments, your Credit Card bills or the EMIs (Equated Monthly Instalments) you forgot to submit. Your credit report should look clean. Keep paying your dues regularly for at least six months prior to applying for a Home Loan. Your Credit information report (CIR), as well as your credit score, must speak in your favour. You can check your credit score with CIBIL, Experian or other credit bureaus. This would give you a clear picture of your credit ratings and boost your confidence if the score is good.
2. Try to Clear Multiple Debts
Since a housing loan requires a fine share of funds, it is advisable to keep other liabilities away. Numerous loans to be repaid will negatively impact your eligibility since your repayment capability will be low.
3. Maintain Good Banking Habits
Good banking habits will not only help you in bagging a loan but will also ease out the stress caused by mismanagement of funds. Your bank account statement is a document that most of the loan providers will ask for, and this statement reveals the truth about your banking habits. You can see how frequently you use your debit card, what is your repayment behaviour, how many times you had to pay the penalty for late payment of EMI and so on. If cheques signed by you were dishonoured, the impression you leave is of a careless person who doesn’t give importance to financial planning.
4. Keep Documents Organised
Maintain a habit of keeping documents arranged perfectly. Along with your photo ID proof and proof of address, you need to submit other reports as well. With your loan application, you have to give your latest salary slip, Form 16, a copy of Income Tax Return(ITR), and so on, if you are an employee. If you are self-employed, ITR of the last three years, the balance sheet of business along with proof of business address will be required. The principal amount to be sanctioned by the bank as a loan depends on these documents.
5. The Crucial Background Check
To avoid the risk of fraud, banks verify not only your documents but also perform a background check to identify if the address you have mentioned is yours or not. Many people have a mismatch in their papers, clear off any mistakes before you apply for the loan. There is also a defined period, for which you should be living in that house or working in the office, the address of which is mentioned in the form.
6. Explore Other Options
You should also explore other options before making a choice. Banks and finance companies keep offering special discounts to the customers; you need to identify the right time for taking the loan. This is possible only if you are vigilant for the changes going around. For instance, if there is a government scheme of subsidized Home Loans going on and you are eligible for its benefits, why would you not take advantage of it? Another such feature for a Home Loan is a pre-approved loan. A loan taken before finalising the property is called the pre-approved loan. It has advantages of its own. If you are sure that within a month or so, you wish to buy a house, you can go for a pre-approved loan. This document stating that you already have a sanctioned Home Loan makes you a dear customer for the developers or sellers. You also are in a better state to negotiate as they know that you are not exploring the market, instead have come with the intent of purchasing the property.
Another significant point to take care of while applying for a Home Loan is the rate of interest to be paid. Many people think that comparing EMI is enough to know the benefits of the loan. However, you must analyse the Home Loan Interest Rates Today, to know if the bank is telling you the exact value or misguiding you with a figure that has already changed. Also, one must compare two loan offers on the basis of processing fee and other hidden charges instead of trusting anyone blindly. All the points mentioned above will make your journey to avail the Home Loan, a lot easier. Read all the documents thoroughly and know about every minute detail that the lender may have missed telling you. The more prepared you will be, the less you will need to worry about the loan.
Also Read: 5 Steps to Getting a Home Loan in India
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