You Might Want to Go Through This Checklist before Applying for a Home Loan in India
Purchasing a home is a major financial decision. As property purchase requires a substantial amount of money, many homebuyers resort to availing of a home loan. With reputed lenders, you can avail a housing loan instantly through a hassle-free online application process. However, before you apply for home loan, you must make a note of the below-mentioned checklist. This will help you make a well-informed decision.
Check your loan eligibility
Checking your loan eligibility is the first and foremost thing you must do before proceeding with the loan application. You can easily check your loan eligibility with the help of an online home loan eligibility calculator.
Arrange corpus for the down payment
While a home loan can help finance 70-80% of your property purchase, you would be required to pay the remaining amount from your own pocket in the form of a down payment. Thus, make sure that you have enough corpus for the down payment. You can utilize a portion of your savings and investments for making the down payment. By making a higher down payment and borrowing a lesser amount, you can reduce the repayment burden of a housing loan significantly.
Evaluate your debt-to-income ratio.
The debt-to-income ratio is basically the proportion of your income that is being utilized for debt payments like credit card bills, loan EMIs, etc. The lower your debt-to-income, the higher would be the chances of a housing loan approval. A debt-to-income ratio of 21%-35% is considered to be a good ratio, whereas most lenders may hesitate to sanction the loan amount if your debt-to-income ratio is 60% or above. Thus, you must try to minimize your outstanding debts before applying for the loan.
Check your credit score
Lenders may evaluate your credit score to determine your repayment capacity. A good credit score of 750 or above can make you eligible for a higher loan amount at a reasonable interest rate. Thus, it’s advisable to improve your credit score before applying for a home loan. You can boost your credit score by paying off outstanding dues, minimizing your credit utilization ratio, and having the right credit mix.
Estimate your home loan EMI
A home loan is a secured loan, and hence its timely repayment becomes all the more important. An affordable EMI can help you repay the loan without troubling your finances. Thus, before applying for a loan, you must calculate your loan EMI by using an online home loan EMI calculator. It’s always advisable to settle for an EMI that suits your budget.
Home loans are long-term financial commitments, and thus, you must analyze all the aspects carefully before making the final decision. In case of any query, you should not hesitate in seeking the help of your lender’s representative. This will help you make a better decision and avoid any hassles later on.