Buying a home for the first time can be exciting and tense at the same time because buying a home is an expensive ordeal, but these days you don’t have anything to worry about because the process of applying for a home loan has been simplified so that anyone can easily approach a lender and apply for a home loan.
The first and foremost thing that anyone has to do is look at their financial health. If you have any outstanding debts like credit card dues, ongoing personal loans, or even any education loans, then it is in your best interest to clear these dues first before applying for a home loan because it may cause hindrance in your home loan repayment capability. Ensure that your CIBIL score is greater than 750 because a high credit score entitles you to better housing loan offers such as lower interest rates and even a larger loan amount. A lender is always looking to offer loans to applicants who are financially healthy because they will be able to repay the loan for the duration of the tenor without defaulting on monthly installments.
Choosing the perfect EMI term is important because you will be repaying the loan for many years. Do not opt for a longer EMI because it may look cheaper because of the smaller monthly instalments, but you will end up paying a lot more interest. Choose a term that is based on your financial feasibility after deducting all your monthly expenses. It is a must that you use a home loan EMI calculator to understand your affordability.
Now that you have decided to purchase a home, you must be aware of your affordability too. Pursuing superfluous aspects of a house, such as fancy interiors and exteriors, will raise the price of the house, forcing it out of your budget. Look for a home within your budget that has ample space, and adequate amenities, and is located in the heart of the city. Before finalising a property, it is best to ensure the credibility of the builder to establish the property’s construction quality.
A lender will not provide you with 100% financing on your home loan, so you will have to make a down payment of 10–25% of the property’s market value. This down payment percentage varies from one lender to another. It is important that you have enough savings to make the down payment. For example, if you have finalised a property that costs Rs. 35 lakhs, then you will need to make a down payment of Rs. 7 lakhs.
Once you have finalised your dream home within your budget, you can start looking around for a lender. It is in your best interest to visit as many lenders as possible to ensure you get the most for your money because doing so will help you understand by comparing the benefits being offered by lenders, such as "who is offering a lower interest rate" etc. Consider the other costs as well, such as the processing fees, stamp duty charges, prepayment charges, etc. You can make an informed decision based on these factors.
Lastly, when you are applying for a loan, make sure you are submitting all the required documents to fast-track the process. If you miss out on a few documents at the time of submission, then this will delay the process even further. Another important aspect to remember is to make sure you are submitting all the authentic documentation because any fraudulent activity will lead to a rejection of your home loan application and may even incur criminal charges.