Every individual dreams of owning their own house someday. It is a matter of great pride and is considered to be a sign of stability. However, the prices of houses can get very expensive and could prove too much of a burden on one’s savings. This is where a home loan can help. Most homebuyers apply for home loan plans to get the finances they need to buy houses. Since home loans generally have long-term tenures, borrowers get enough time to repay the entire loan through monthly instalments.
Now, if you are planning to get a loan to buy a house, this is the right time as the home loan interest rate is at its lowest. However, before doing so, it is important to focus on the following aspects:
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Try and go for a short repayment tenure
This is something that most borrowers do not opt for. This is because long tenures mean smaller monthly instalments that are easier to pay off. However, paying off the home loan in a short tenure has its benefits too. A short tenure means cutting down the total number of instalments. This means cutting down the interest added to each instalment too. Therefore, even though the monthly instalments are higher in a short repayment tenure, you are actually saving on the total cost of the loan.
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Clear all credit card dues
Lenders account for a fraction of a borrower’s credit card dues while calculating their debt capacity. This is why it is important to clear any dues and make sure to not default on any payments on the credit card. A clear record is a positive sign for a lender giving a home loan.
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Consider the LTV ratio
Most lenders consider the LTV (Loan to Value) ratio while deciding the amount of the home loan. For properties that are priced above Rs 75 lakh, lenders usually offer 80% of the total cost. The remaining 20% will have to be covered from personal savings.
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Keep an eye on the credit score
Any financial institution is going to be checking the credit record of borrowers applying for home loans. Lenders consider a good credit score to be above 750. So, before filling out a home loan application, it is best to make sure that you have a decent credit score to get a good loan offer.
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Use a home loan EMI calculator
It is essential to plan finances while taking a home loan. This is the reason why you should make use of a home loan EMI calculator, which will help calculate the loan’s monthly instalments. With the help of this home loan calculator, you will be aware of the EMIs and can make a decision on whether the loan plan is affordable or not.
Now that you have gone through these pointers, study various lenders’ home loan plans. It is also beneficial to check with the lender regarding the documents required for home loan. This will help you keep all the documents in place, making the loan process a lot more efficient.
