Big dreams often come at big prices. And owning a home is everyone’s big dream. You may have visualised, planned and even spotted ‘the home’ you want. Now don’t let the price tag kill your dreams. There are banks and financial institutions that come to your aid, offering home loans that help you realise the longstanding dream. We have put together a couple of tips that will guide you through the process of home-loan application, and help you secure the best home loan.
- Are you eligible? – How you have handled your previous loans and your credit card payments are crucial factors in establishing your home loan eligibility. A good CIBIL (Credit Information Bureau India Limited) score and your net salary will decide if you have loan repayment capacity.Shop for home loans – Be it lower interest rates or additional schemes; there is a lot out there to confuse you. Take time to look around and choose the right home loan. Read the terms and conditions of all the banks or financial institutions you may have shortlisted. You may even want to check out their customer service policy and any other hidden charges involved. Look for banks that offer ‘smart loans’ where you can prepay a part of the loan to bring about changes in the interest rate or EMI amount.
- Calculate your EMI – The amount of equated monthly instalments you can afford is a very important decision you need to make. Do a rough calculation of your current financial commitments and monthly expenditure, and check how much of your income is left after you have put away the essentials. Now check how much you can afford to pay as EMI.
- Interest rate negotiations – While banks say that interest rates are non-negotiable, they might be able to make adjustments. Discuss the possibilities.
- Read the fine print – It is natural for a loan salesman to push into signing that paperwork; but don’t be in a hurry. Take your time and read the agreement a couple of times. Ask questions when in doubt. A smart way to read the fine print is to approach a friend who has technical knowledge about housing loans so that you get a different perspective on what you are signing up for.
If you have a bad credit history, your home loan application is likely to get rejected by most banks. With a low credit score, even if you do manage to secure a loan, you might have to pay a huge down payment or shell out heavy interest on the loan. An advisable way to work around the problem is to look for lenders online. However, beware of predatory lenders. Be smart about choosing your lender and work towards improving your credit score.