Tips for Getting a Home Loan for First Time
Purchasing a residential property is a significant investment, which often takes years of planning and budgeting. Even so, buying a new home solely from savings could be quite challenging. With various pre-approved home loan plans coming into play, availing funds for a new house is simpler now. If you are planning to get your hands on a housing loan for the very first time, you should start by researching and gathering information about it in detail.
You could ideally start by analyzing your current financial capability, so you know how to proceed about it. It would also help you plan your home loan better. Alongside this, you must keep in mind the various tips that might help you get your housing loan application sanctioned on the very first attempt.
Tips for first-time home loan borrowers
When you purchase a new home, it is not only about the cost you pay to the seller. In addition to that, you will also have to bear several miscellaneous expenses related to setting up a new house. This is why you must consider a home loan as a safe option to acquire funds.
Central government schemes like Pradhan Mantri Awas Yojana have made housing expenses affordable to a great extent in India. There are other factors too as to why this is the ideal time to buy your dream house. But, to make that possible, you need to plan your housing loan wisely. Given below are some crucial tips for you-
Enquire about the basics of housing loan
Knowing home loan eligibility criteria is essential before approaching a lending institution. It would also help if you were well-versed in the documentation process, which should simplify the application process. If your lender provides pre-approved home loan offers, it can reduce approval times further.
Maintain a proper credit score
The Credit Information Bureau (India) Limited maintains the credit history of every citizen. You must limit delinquencies and late payments when it comes to your credit card bills or EMIs from other loans to improve your creditworthiness.
The credit history of a housing loan applicant is scrutinized thoroughly before sanctioning funds. This is to make sure that you are eligible enough to borrow funds and repay them responsibly. You must ensure that your credit score is above 700 to avail of home loans from reputed HFCs.
Maintain an error-free CIBIL report
Errors in your CIBIL report can harm your credit scores significantly. Such flaws could also result in the rejection of your home loan application. Check your CIBIL report thoroughly to spot these errors and rectify them at once, before submitting your home loan application.
Keep your FOIR in check
FOIR stands for Fixed Obligation to Income Ratio. It is the ratio of the gross monthly income of an individual to his/her monthly liabilities. Generally, this ratio increases if you have several concurrent credit repayments at a time. A FOIR of up to 40% is considered acceptable, and most lenders may extend housing loans to you if that is the case. However, higher FOIR may lead to loan rejections.
Start preparing for the down payment.
The down payment of a property is the sum you will have to pay from your pocket. The housing loan you borrow for a property suffices about 80 to 85% of the property price. The rest 15 to 20% is to be paid by the buyer from his savings. One of the easiest ways to reduce home loan tenure and EMI is to bear a larger portion of the property’s price as a down payment, which results in limited home loan quantum, and thus, lower EMIs.
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Finalizing the best home loan rate
Try to find the best housing loan deals charging affordable interest rates. This would keep you away from stress once the repayment tenor begins. Compare the home loan interest rates from various lenders to gauge the best option. A home loan eligibility calculator can aid you in this pursuit, helping you assess the liabilities even before availing of a housing loan.
Moreover, financial institutions may provide pre-approved home loan offers to expedite and accelerate the application process. You can find such offers on a range of financial products, including home loans, loan against property, and more. You can check your pre-approved offers in a matter of a few seconds by providing your name and contact details.
First-time borrowers should prepare for all of the formalities involved in buying a home. A systematic approach should help ease the loan application, as well as the repayment. With careful financial planning, one can easily service home loan EMIs without compromising his/her financial security.