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Property is a valuable asset that may provide you with various financial benefits. Whether you want to purchase property for investment or locate a new home, the banking industry offers a variety of lucrative and helpful lending options. If you are short on funds or do not want to liquidate your savings, a house loan is the best source of financial aid. Banks assist in making your goal of acquiring a property a reality by offering low monthly payments and the flexibility to pick the repayment term that works best for you. However, before you begin the application process for a house loan, consider the following vital ideas that may assist in smoothing the application process and streamlining loan payments.
Examine Your Credit Score
When you explore the home loan options, then credit score is important to determine. A credit score serves as the foundation for a simple home loan application procedure. This score is determined by how consistent you are or how well you pay your EMIs and credit card bills. The credit information report (CIR), which includes your Credit Score, is essentially a credit history of your borrowings from various organizations such as banks, NBFCs (Non-Banking Financial Companies), or Housing Finance Companies (HFCs).
A reputable credit bureau generates and keeps your credit records and provides them with banks/lenders whenever a loan provider inquiries. The higher the credit score, the more likely the loan will be accepted. As an added benefit, the best interest rate on a house loan is available. Check your credit score for at least six months, ideally a year, before you want to buy a property.
Think about your budget
Define your budget for purchasing a house, how much money you can put down as a down payment, and how much of a home loan you would need. If your income appears to be sufficient, you may often obtain a house loan for up to 80% of the property’s worth. Determine the EMI range you are comfortable with since this will assist you in deciding on the loan’s tenure. You can use online EMI calculators to experiment with different choices to help you here.
Identify the correct banks and lenders
Avoid applying to too many lenders at the same time since this can have a negative influence on your credit score. That doesn’t mean you shouldn’t weigh your alternatives. Determine whether banks or home finance businesses have pre-approved the property where you intend to buy a house since this might save the time it takes for your loan to be accepted. Understand the qualifying conditions of such lenders in terms of credit score cutoffs and lending schemes (processing fees, the rate of interest, etc.). Choose one or two lenders who best meet your needs and have your loan approved with them before reserving the property.
Considering the aforementioned factors can help you prepare for your house loan and increase your chances of receiving a rapid home loan approval. If you are considering co-borrowers, make sure you prepare them to check their credit score and keep their documentation available. This is the first-time home buyer guide for all those exploring home loan options.