When you start your search for a home loan, the market will have several options for you, but it is of utmost importance that you select one that aligns with your funding requirements and financial capacity. While these sounds like unrealistic expectations, finding the perfect home loan is in fact, a very achievable ambition. With thorough research, lender comparison and market benchmarking, you can zero in on the right lender whose home loan offerings benefit your home buying plans the most.
An immense importance is placed on this compatibility because a home loan is a long-term financial commitment and managing your repayment plans well can help you stay on course with your EMI schedule and minimize the chances of delayed payments. With several home loan lenders vying for your attention, it is crucial that you assess your own home loan eligibility and pick a lender whose offerings are competitive and guarantee maximum savings.
This article walks you through a series of factors you should consider before choosing a home loan, so your final choice is also your best.
Things You Must Consider Before Availing of a Home Loan
Here are some basic parameters you should meet, in your search for the right home loan. This can help ensure that the home loan you settle for makes sense for your current finances and your future goals.
1. Evaluate your Home Loan Eligibility
All home loan lenders expect aspiring borrowers to meet their eligibility criteria, especially since most make it easy-to-meet and quite direct. Before you zero in on a lender and initiate the application process, it is a good idea to test your own eligibility against the lender’s criteria to see how well you fare.
This exercise can prevent you from making an overambitious home loan application that will most likely get rejected by the lender. Not only would that spell poorly for your home loan needs, but a loan rejection also adversely impacts your credit profile.
Be sure to use an online home loan eligibility calculator to assess your current standing, and tailor your home loan application accordingly – ensuring maximum chances of getting approved with your desired loan terms. What’s more, is that if you are still unable to meet the lender’s eligibility benchmark, you can invest time in enhancing your profile, so you stand to get better terms at the time of filing your home loan application.
2. Select Competitive Home Loan Terms
Needless to say, all borrowers hope to secure the most competitive home loan terms they are eligible for. By ensuring that your home loan eligibility is at par with the lenders’ expectations, you allow yourself considerable leverage in negotiating terms that benefit you.
Factors like the home loan interest rate, repayment tenor and the principal amount have a direct bearing on your total cost of borrowing. When you have a strong home loan eligibility, such as a CIBIL score of 750 and higher, you can request attractive interest rates and a sizeable loan sum.
3. Plan Your Down Payment
A home loan can finance up to 90% of the property value, so the borrower has to fund the remaining amount themself. Prospective homebuyers can reduce their cost of borrowing by planning the down payment well in advance, so their home loan principal falls well within their repayment capacity.
Making a sizeable down payment not only eases your repayment burden but also projects you as a financially prudent borrower in the eyes of a lender. Consider planning and saving for your down payment well before time, so at the time of purchasing the property and applying for a home loan, your asks and expectations are managed.
4. Keep Necessary Documents Handy
Worrying about the documentation part of the home loan application process during the preparatory phase may seem premature but having them arranged well before time can ensure a smoother and hassle-free application journey. Anticipating what you may need and keeping them ready allows you the freedom to consider every home loan lender with competitive interest rates without the fear of rejection.
While these are not the only factors to consider while choosing your home loan, making sure you take care of these will help you advance in your search. Being absolutely sure about your lending terms would mean that you have secured the best home loan offer possible.
There are several online calculator tools that can help in this endeavour and using them can improve the quality of your home loan application, making you eligible for the best lending terms in the market.