For many individuals, it is a dream to buy a home. However, most fail to fulfil their dream considering the significant expenditure. However, opting for a housing loan in India is one of the easiest ways to purchase one’s dream home.
Borrowers need to choose a lender or financial institution considering factors like loan tenor, home loan interest rate, and other similar factors. Moreover, a applicant of housing loan in India should be meticulous and commit to a long tenor when applying for a home loan.
A complete home loan checklist for future home loan applicants
A home loan applicant should consider the following things before applying for a housing loan.
This is one of the major factors that influences the total amount of spending incurred against a home loan. Different lenders or financial institutions offer different housing loan interest rates.
Borrowers who have a good credit score, stable monthly income and has multiple working years left, can positively impact the interest rate. Another factor that determines the home loan interest rate is the loan repayment tenor.
Loan repayment tenor
The loan repayment tenor indicates the period within which a borrower plans on repaying their borrowed funds from the lender. Borrowers can choose between a long loan term and a short loan term.
Considering the different types of loans, a home loan offers the longest repayment tenor. However, a long tenor means less monthly instalments but overall higher interest cost. On the other hand, a short loan tenor means more EMIs but spending less on interest.
The property’s location is another factor that borrowers should thoroughly consider in their home loan checklist. If the property is at a prime location, has basic amenities nearby, and has good communication, the risk factor will be less. Lenders might even offer the borrower an affordable interest rate. Additionally, the risk factor of such a property is also minimal.
For a home loan, the documentation required is minimal. Some of the basic documents required include a valid ID and address proof. In the case of salaried employees, a proof of employment status is essential, and for self-employed individuals, business ownership paperwork is mandatory.
Apart from these, borrowers might have to provide documents as requested by their lender. Further documentation asked for might include income tax returns, salary slips, and bank statements.
The eligibility criteria for a home loan are pretty basic. Borrowers should qualify under certain grounds to become eligible to get a home loan.
Some of the common factors include if the borrower is an Indian citizen of India or not, his/her employment status, financial stability, and CIBIL score. Another factor considered is the age of the borrower and how many years of working experience he/she has in hand.
The CIBIL score of the borrower determines his/her creditworthiness. In other words, it represents how frequently and responsibly a borrower has paid off his credit.
Lenders would always opt for a borrower who has a good CIBIL score, as this diminishes their risk factor. Furthermore, a good CIBIL score also opens doors for other benefits like a lower housing loan interest rate.
Pre-approved loan offers (if any)
Today most lenders and financial institutions offer their existing customers pre-approved offers. These offers are mainly available on home loans, loans against property, and other similar products. Moreover, these offers simplify and accelerate the overall housing loan process. Borrowers can check their pre-approved offers by entering name and contact details.
Balance transfer facility
Housing loan balance transfer is another attractive advantage that borrowers can enjoy when they opt for a home loan. Under this facility, borrowers get to shift to another borrower who provides better offerings that are more suitable for their financial status.
The things to consider when opting for balance transfer include an affordable interest rate, better services, online account management, and a longer loan tenor. Some lenders additionally offer a top-up facility, which stands to be further beneficial for the borrower.
Now, considering all the factors mentioned above, borrowers can compare offerings across lenders and choose the best housing loan in India. In addition, borrowers can also use an easily available home loan calculator to get the exact division of their future expenses towards their borrowed funds.