Purchasing your dream home with the help of a home loan can be considered a wise move on any given day. It’s far better than using your savings or staying indefinitely in rented accommodations.
Furthermore, housing finance has become much easier over the years. Nowadays, finance for a home purchase is not only easy and quick but can be availed at good interest rates too.
However, before you take the plunge and sign that home loan application form, please go through the steps detailed below to improve your chances of home loan approval and worry-free repayment tenure.
Save Money for Making a Considerable Down Payment
There are different interest rates applicable to different loan brackets. For instance, home loans below ₹ 30 lakh fall in the lowest bracket and come at the lowest interest rates.
Home loans falling between ₹ 30 lakh to ₹ 70 lakh are offered at comparatively higher rates. And any home loan above ₹ 70 lakh would be offered at the highest interest rate.
Therefore, it is best to save ample money before taking the home loan, to ensure that you don’t end up paying a bomb as interest.
You should utilize your savings to make a considerably larger down payment, and try to bring yourself into the under ₹ 30 lakh category, to avail the best interest rate.
Maintain a Healthy Credit Score
Maintaining a healthy credit score is critical to any home loan application. A poor credit score shows you in a bad light to the prospective lenders, and would most likely lead to home loan rejection or an unreasonably higher interest rate.
Hence, before applying for a home loan, ensure that you have checked your credit score and taken all possible steps to improve it.
Use a Home Loan EMI Calculator
Using an efficient home loan EMI calculator, such as the kind offered at GoSahi.com, before applying for a home loan, gives you a fair idea about how much money you’d need to set aside for home loan repayments each month.
It would also tell you if you are eligible for the required home loan amount or not, depending upon your monthly income. On the whole, you can plan your entire repayment journey, and ensure that you don’t end up in any defaults.
Arrange all the Home Loan Application Documents
A home loan is a type of secured loan would require you to submit various types of documents along with your application, for example, your income proof, residence proof, ID proof, property-related documents and more.
Make sure that you have all the relevant home loan application documents, as requested by the prospective lending establishments.
Buy Life Insurance
While this might seem slightly off the topic, buying life insurance is amongst the most critical things you must get done prior to the home loan application.
Why? We all know that home loans are normally of a huge sum that needs to be paid back to the lender. It’s all good as long as you’re alive to repay it.
However, in the unfortunate event that you’re not around, who will pay the EMIs for the home loan? The entire burden will fall on to your immediate family who might not be financially prepared to make those payments. It is in this situation that a life insurance policy can be of great help.
Go Through the Terms
Although this seems pretty obvious, you’d be surprised to know how many people don’t pay any heed to the terms at all, and then receive all kinds of shocks when it’s too late.
Make sure that you go through the terms as early as possible, even if it takes a lot of time. Don’t shy away from asking for clarity if you find something concerning or not right.