- To purchase a home is a big deal for many of us, as it involves a substantial financial commitment. Arranging finances for buying is one of the important things that many people work hard for and save money for, but it is not always easy.
- Saving for a home is quite tricky in the current inflation, and that is why 90% of people move ahead with a home loan to fulfil their dream. The process is lengthy and begins with the completion of the property, according to affordability. You have to analyse your financial options and build your plan on that and start the process.
- The next step for applicants is to find a suitable lender and apply for a home loan. Whether you qualify for the loan depends on the lender’s eligibility criteria, which are based on your ability to repay your loan, income, and job stability. The eligibility criterion plays a crucial role because home loans are more costly than other types of loans, and the tenure ranges from 10 to 30 years. As a result, home loan providers have become increasingly strict in approving mortgages and home loans.
- As a home seeker, it is advisable to take preparatory steps, and you must do your homework to qualify for a home loan and get a smooth approval of your home loan application.
Calculate the cost of homeownership by making a budget
- The cost of a home is not the only cost that homebuyers bear when they buy it; there are many additional costs that you pay when you buy a home.
- These costs are not included in your home loan, but you must pay for them. It has a registration fee, stamp duty, property taxes, insurance, GST and other fees. When you set a budget for your house purchase, all your expenses must be taken into account. Thereby the people can opt for loan at an affordable home loan interest rate which can be very helpful.
Check your Credit Score
- Applicants must check their credit rating before applying for a home loan. Credit rating is a numerical term provided to individuals by credit reference agencies based on the credit history that represents financial health.
- A credit score of 700 is considered acceptable and presents potential customers with a high credit rating. If applicants find the credit score low, they should take significant steps to improve it before knocking on the lender’s door. To minimise the risk of rejection, applicants should check their credit rating with a credit reference agency before applying.
Remove Error From Your CIBIL Report
- Your credit report may contain errors or have not been updated by the credit reporting agency once your lender provides you with an update.
- So even a single missing update from your lender can negatively affect your CIBIL. In case of an error in the credit report, you can report it to the credit reporting agency and ask them to update it for you.
- As with your credit rating, your lender will check the credit report, so keep it accurate, which is essential. This ensures a flawless CIBIL and brings you one step closer to a home loan, and that is all the more critical.
Ensure Pre-approval for the Home Loan
- To ensure that you will get a loan is to get pre-approval for a home loan from a lender.
- Prior approval depends on your ability to repay the loan. If you are sure of your budget, a pre-approved home loan makes it pretty easy, as the loan amount can be disbursed anytime.
Manage Your FOIR
- FOIR (Fixed-Obligation-to-Income) is a ratio of monthly income and total loan payments. In addition to credit rating, lenders always consider FOIR rating, and if it is 50 or more, they will reject the application.
- If the FOIR is 50 or higher, it is better to close the loan or pay the dues of the credit card fees so that the ratio drops. So before applying for a loan, you should ask the same.
Be Ready for the Down Payment
- The home loan never covers the full price of the property. Borrowers have to pay a certain amount, called as down-payment. The maximum amount you can get from a home loan is usually 80-85% of the property value, and the down-payment covers the remaining 15-20%.
- With high house prices, it will be difficult for many of us to arrange the amount, but preparing it beforehand makes it easier for you to get your loan approved.
Conclusion: So go one step further and start planning to own the house of your dreams, and follow the steps above to be prepared and ensure that your approval for the home loan goes smoothly. Buying a home indicates your financial stability and has a positive impact on your long-term economic well-being. Please make sure the excitement of buying your first home doesn’t make it too difficult for you to monitor the preparation of the home loan.