Checking the Home Loan eligibility is the first thing you should do when planning to apply for a Home Loan. Generally, banks and other financial institutions consider various factors such as age, employment stability, income, and credit score before approving your Home Loan application. Also, many Home Loan transfer options are available in the market if you’re looking to transfer your Home Loan.
A Home Loan is a secured loan taken by individuals to buy a house. In India, Home Loans are provided by banks and NBFCs (Non-Banking Financial Companies). You can repay the loan either in EMIs (Equated Monthly Instalments) comprising the principal amount and interest or through a lump sum payment at the end of the loan tenure.
In India, Home Loan interest rates are either fixed for the entire tenure of the loan or floating, which means that they change in sync with the market rates. Currently, most banks offer Home Loans at Floating Interest Rates (FIRs), usually 1-2% higher than FIRs.
The process you need to follow to avail Home Loan in India involves the following steps.
- Determine your Home Loan eligibility by using a Home Loan eligibility calculator. So, you can estimate the loan amount you can get.
- Shop around for the best Home Loan interest rates and compare different lenders before choosing one. Make sure you check for any processing fees or other charges involved.
- Once you have chosen a lender, apply for the loan online or visit their branch to submit the required documents. These usually include KYC documents (identity and address proof), income proof (salary slips, ITR statements, etc.), and property-related documents (agreement of sale, transfer deed, etc.).
- The lender will assess your loan application and sanction the loan amount if everything is in order.
- Once the loan is sanctioned, you must make an initial down payment (usually 10-20% of the total loan amount) and sign the loan agreement.
- The remaining loan amount will be disbursed to you, which can be used to purchase the property.
- You will then have to start repaying the loan through EMIs, typically of 15-30 years. Make your payments on time to avoid any penalties or late fees.
If you want a Home Loan in India, compare different lenders and choose one that offers the best interest rates and terms. In just some clicks, you can use a Home Loan comparison tool to compare and apply for loans from over 30 banks and NBFCs.
Here are a few tips that can help you increase your chances of getting your Home Loan approved:
Maintain a good credit score
A good credit score may benefit you significantly with your Home Loan transfer. Clean financial history with no credit card debt or any other debt will help you qualify for the best rates. Still, it will also aid in receiving the greatest possible offer, whether looking at two-, three- or four-bungalow locations or apartments. Excessive credit inquiries or multiple mortgage applications can negatively impact your credit score, so it’s a good idea to stop any borrowing activity before it starts.
Check your eligibility and compare the options
Numerous Home Loan products are available in the market and choosing the one that best suits your needs can be overwhelming. You must check your eligibility for each product before applying for a Home Loan. Once you have shortlisted a few products, compare the interest rates, fees, and features to make an informed decision.
Consider a shorter loan term
One of the ways to reduce your overall interest payments is to opt for a shorter loan term. Although you may have to pay higher EMIs with a shorter loan term, you will save on interest payments in the long run. You can also consider making extra payments towards your Home Loan to reduce your loan tenure.
Prove your income and employment stability
Lenders also consider your employment stability and income when assessing your Home Loan application. To increase your chance of getting approved, provide documents that prove your income and employment stability, such as tax returns, pay stubs, and employer verification letters.
Choose a loan with affordable monthly payments
When choosing a Home Loan, make sure to pick one that you can afford. For this, consider the total cost, including interest and fees, as well as your monthly income and expenses. Now, it’s easier for you to apply for a Home Loan transfer later on.
PRO TIP: Make a large down payment
Making a large down payment toward your Home Loan will help you reduce your interest payments and the overall tenure of the loan. In addition, it will also help you negotiate a better interest rate with the lender.
In addition to saving up for a down payment and getting your finances in order, ensure you do everything to increase your chances of getting approved for a Home Loan. Following these five tips gives you the best chance of success when applying for a Home Loan as per your Home Loan eligibility.