Things to keep in mind before taking a Home Loan

Things to keep in mind before taking a Home Loan

Buying a house is one of the most significant financial decisions one makes in their life. With the spiralling prices of property, selecting the right loan has become more critical than ever. Whether a person is looking forward to purchasing property for investment purposes or for finding a new home, home loans in India provide many lucrative and beneficial opportunities.

A home loan is an excellent form of financial assistance if one is short on cash, or not in favour of liquidating the savings. With an option to choose the repayment tenure, easy monthly instalments as per the convenience of an individual, banks and NBFCs make the dream of purchasing a home, reality.

Before applying for home loans, here are some essential things to keep in mind that will help ease the application process:

Research loan options

With digitisation taking centre stage comes easy accessibility of information. Make an effort to conduct extensive research on the options available before applying for a home loan. The research should inculcate three vital factors that formulate a loan, i.e. EMIs, tenure and repayment. This will enable one to choose a suitable home loan from a better lender at attractive interest rates and convenience. The amount for a home loan is relatively larger than any other loan amount. Therefore, it is essential to do thorough research for the right home loan and financial lending institution.

Choose Suitable EMIs

While opting for a longer tenure results in smaller EMI amounts, however, interest rates also increase. Therefore, salaried individuals should plan a strict budget and opt for shorter repayment tenure. The monthly instalments will be high, but in the long run, it will decrease the home loan cost for the interest charged on the loan amount. EMI amount depends on the down payment submitted at the time of making a house purchase. It is advisable to ensure that the chosen EMI amount does not exceed 45% of the total income.

Maintain Credit Score

Credit or CIBIL score is another major factor that various banks and NBFCs consider before providing any loan. It is essential to maintain a good credit score to avail a home loan. If a person has a good credit score, then they earn better interest rates on their home loan. Maintaining a good credit score is not difficult and can be done by making timely payments for credit cards and existing loans without fail.

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