4 Factors to consider before applying for a home loan

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The BFSI sector offers multiple provisions for people who aim to own a home. With increasing property rates, it isn’t easy to rely on your savings entirely.

A home loan is financial assistance offered to an individual who falls short on finances while planning to make one of the most significant purchases of his lifetime.

People often miscalculate their finances when there is inadequate information concerning Home Loans.

Besides considering fundamental factors when you first intend to apply for a home loan like interest rates and EMIs, changing RBI Norms also prove advantageous at many levels.

Often, foreclosing your home loan by repaying the outstanding amount before the repayment tenure saves you from paying additional expenses. Before submitting the loan application, consider all the possibilities and charges involved.

Discuss the same with your financial confidant so that you can plan your monthly finances accordingly.

Following are the factors one needs to keep in mind while applying for a Home Loan:

1. Determine the quantum required:

While applying for a Home Loan, it is essential to decide the required amount for a well-planned purchase calmly.

Calculate all your savings that are kept aside. However, the principal amount will further determine the actual amount that you may have to repay within the tenure chosen for the Home Loan.

Moneylenders such as banks and financing companies offer up to 80% of assistance depending on the need of every individual’s financial stability.

2. Clear previous debts:

A home loan will be an added debt if a person has any other debt like a personal loan, gold loan, etc.

Repayment of all these can prove to be stressful in the long run. Very often, people keep piling up debts without realizing that income stability is an essential criterion if you need to borrow any additional amount.

Hence it is suggested that while inflation plays its tantrums, you first try and clear off the previously borrowed dues or at least bring its principal amount to the lowest.

3. Rate of Interest:

The rate of interest plays the most crucial part in any incurred debt.

The best way you can manage your borrowing costs depends on how well you work your home loans.

Any individual applying for a home loan will first check the housing loan interest rate across financial institutions since this determines the actual repayment amount over and above the principal amount.

Hence people often choose those home loans that have a low rate of interest.

4. Maintain CIBIL Score:

Among the various criteria laid down by the banking sector, Credit Score (commonly referred to as CIBIL Score) is one of the essential parameters one needs to consider while applying for a Home Loan.

Regularity and discipline in paying off your debts is the fundamental law in maintaining your credit score. If you have a score that exceeds 750, then your have scope of eligibility to get a home loan approved.

We Indians love physical assets but often fail to include the considerable liability it brings.

Hence it is essential to prudently calculate your finances, your ability to incur debt, and other factors it influences before you apply for a home loan.

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