By Are you planning to apply for a home loan today? Before you submit a home loan application to a lender, you must understand all the factors that can impact your home loan. On that note, here’s listing out the top five factors to note before you apply for a house loan.
#1 Eligibility
The first and foremost thing to consider is whether you are eligible to get a house loan at present. There are a host of factors that impact your eligibility, such as:
- credit score
- age
- professional stability
- loan tenure
These are only a few instances of the factors that are considered. So, start by taking care of each of these aspects first. If a low credit score is affecting your home loan eligibility, work on repaying some of your ongoing debt. If age is the issue, try to get a younger co-borrower for the loan, and so on.
#2 Interest rate
The Reserve Bank of India (RBI) has some guidelines and limits set for the interest rate of home loans. However, the decision to set an interest rate ultimately lies with the lender. This is the reason why you see so many different banks have different interest rates.
It also gives them the liberty to offer options to the borrowers. For instance, women might be offered a lower interest rate than men. In any case, it is a good idea to compare the rate of interest for a few lenders before you go ahead and choose one.
#3 Down payment
Down payment is the upfront amount you deposit for the loan. The outstanding amount with interest is paid by you every month as EMIs. If possible, make a high down payment on that loan because that will lower your loan value. You will pay a lower monthly EMI due to a higher down payment.
But remember to consider other necessities and financial obligations before you increase the down payment on your house loan. Also, you will have to pay the rest of the amount for buying or building your house because the lender will not pay more than 75 to 90 percent of the property value.
#4 Credit score
Your credit profile is another thing that attracts a lower interest rate and increases your eligibility for the house loan. If you want to apply for a house loan today, now is a good time to check your credit score.
#5 Documents required
You will find a list of the necessary documents on the lender’s official website. Before you sit down to apply online for the loan, get those documents together. The last thing you would want is to stop the application process midway because you do not have the required documents.
Apart from your identity proof, you are also required to produce your income, income tax returns, bank statements, and so on. If you are self-employed, you will be asked to submit profit/loss accounts and the balance sheet for a particular period of time.
The Bottom Line
As you can understand, getting a house loan has become easier now than ever. If you take care of all the above factors, you will face no problem getting the house loan you need.
