5 Crucial Tips to Know Before Applying for a Home Loan

Applying for a home loan is one of the best ways to get the required funds for purchasing the dream home. But, before you initiate the home loan application process, you must take specific steps to ensure a smooth borrowing experience. Read on to know more.

No matter if you are looking to buy your first home, or if you want to construct one for investment purposes, several lenders offer home loans. With easy EMI options, competitive interest rates, and flexibility to choose the tenure, a home loan is the most definitive way to make your dream of owning a home become a reality. But, before you start applying for a home loan, here are a few critical suggestions you must remember to enjoy a hassle-free borrowing experience.

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Know about the lender’s eligibility requirements

All home loan lenders have specific eligibility requirements, and only if you meet these requirements, they will consider you a potential borrower. Typically, most lenders check the creditworthiness, age, occupation, income, of the borrowers. Knowing the eligibility beforehand will help you save the hassles of getting the loan rejected.

Keep a tab on your CIBIL score.

The credit score is an important factor that the lenders consider while approving a home loan. Most lenders require the borrower to have a credit score of 750 or more to be eligible for a home loan. So, before you start your loan application process, check your CIBIL score to see if it meets the lender’s requirement and if not, try to improve the score before approaching the lender.

Check the interest and other associated charges.

While it is essential to consider the interest rate, you must not choose the lender that offers home loan with low interest. Instead, you must consider other charges too. Apart from the interest, there are several fees that you must incur to avail the loan. And, one of the most common costs is the loan processing fee that you must pay upfront at the time of applying for the loan. The fee generally is 0.50% of the home loan amount. Also, you must consider the prepayment charges, legal fees, etc.

Check the legality of the property.

Before you make your final decision to purchase a specific property, it is paramount that you verify the credibility of the builders. Make sure to assess the reputation of the builder, the past projects, delivery track record, etc. Also, make sure to check if the builder has all the relevant property-related documents.

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With RERA (Real Estate Regulatory Authority) implemented across all regions, you must check the builder’s profile on the RERA website and see if the regulatory body approves the project. Generally, the lenders do not approve loans for projects that are not RERA registered.

Make a higher down payment.

Before you start looking for the lender, you must assess your finances thoroughly and chalk out a plan on how much you can afford to borrow, what is the maximum down payment you can afford, and how you are planning to repay the loan. Generally, most lenders require home loan applicants to pay at least 20% of the property value as a down payment. However, if possible, you must opt for a higher down payment. This will significantly help you reduce the amount you borrow and subsequently save a significant amount in the long-run.