5 Tips to Remember Before you Avail a Home Loan

With technological advancements, applying for previously-complicated financial instruments like a home loan has become a lot easier. New-age lenders have now simplified access to these secured loans down to a few clicks online. With easier access to a home loan, you must ensure that you’re getting the best deal and planning repayment for minimum hassles. To that end, here are a few tips to keep in mind before you avail a home loan. 

Know the type of home loan you want

Depending on the lender you go with, there may be several types of home loan offerings you can choose from. Generally, there are 3 main types, which are fixed-rate, floating-rate and combination home loans. Deciding between these 3 is among the important decisions to make as it has a hand in the interest rate you will get, which affects your EMIs.

With a fixed-rate home loan, your interest rate doesn’t change throughout the tenure and you’ll pay the same EMIs until the end of the loan. Picking this option will usually come with a higher interest rate. On the other hand, a floating-rate home loan is one in which the interest rate changes as per the lender’s benchmark rate such as the repo rate. As such, the effects of the change apply to your repayment and you could end up spending a lot more or a lot less in comparison. This is usually a better option for people with a higher risk appetite. 

Lastly, the combination home loan is one that has a fixed-rate component for a part of the tenure and a floating rate component for the other part. This may be the best option for some, especially in profitable market conditions.

Check and meet the lender-specific home loan eligibility criteria

When it comes to home loan eligibility terms, most lenders have some specific parameters by which they judge your creditworthiness. However, there are a few general criteria that you should meet that will help you cover most bases. 

  • Applicants must be between the ages of 23 years and 70 years
  • Applicants must have a CIBIL score of at least 750
  • Applicants debt-to-income ratio should not exceed 50%
  • Applicants must be salaried or self-employed
  • Salaried applicants must have an income history of at least 3 years

Find the best home loan tenure for yourself in preparation 

Before you avail a home loan, it pays to prepare a repayment plan. If not the complete strategy, you should at least zero in on a suitable tenure. You can do this with help of the home loan EMI calculator as it shows you the corresponding EMIs for each tenure option. Remember, when picking a tenure, consider your total interest outgo but don’t pick a tenure that would lead you to pay very costly EMIs unless your income can support this.

Gather all the required documents

When applying for a home loan, it is best to have all the required documents on hand. This eliminates delays and helps with seamless loan processing. Here is a list of the documents required generally. 

  • KYC documents: ID proof and address proof
  • Income documents: Salary slips or IT returns for self-employed individuals
  • Property documents: Title deeds, agreement to sell, etc. 

Prepare to negotiate the home loan interest rate
A good tip to keep in mind is that you can negotiate for a lower, more suitable interest rate. With a stellar financial profile and a clear credit history, you can get a reduced interest rate by talking to a lender’s representatives. Remember, even a 1% to 2% reduced interest rate translates into huge savings in the long run. 

Keeping these tips in mind is sure to help you get the most out of your loan and help prepare you before you apply. Home loan applications aren’t like any other and you shouldn’t approach them with that mentality either. Your goal should be to aim for affordability and to save as much money as possible. Ideally, the best way to achieve this is to find a lender with relaxed home loan eligibility terms and affordable interest rates. A good option that meets this checklist is the Bajaj Housing Finance Limited Home Loan

This offering gives you access to ample funding, unique loan perks and quick loan processing protocols. Here, you can get approved for a sanction of up to Rs.3.5 crore and at a competitive interest rate. To make it better, you can opt for a flexible tenure that ranges up to 30 years and tailor repayment to your convenience. Additionally, applying for this home loan is a quick and easy process as you only have to meet lenient criteria and submit minimal documentation. This eliminates any long-winding formalities and procedures, giving you access to funds quicker. To enjoy these perks and more, apply online for a truly hassle-free borrowing experience.

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