Buying a house is a goal for many. However, it takes years of planning and hard work to buy property, especially in metro cities. The cost of real estate is high in leading Indian cities, so you need a substantial amount of money. Most Indians do not have the money to buy a property in cash, but they can finance it using a home loan. Here is a checklist you can use to ensure lenders accept your home loan application.
- Ensure you have a healthy credit score
A credit score is a scale that indicates your credit and repayment history. A healthy score suggests that you are careful with your credit usage and make your repayments on time. Hence, it is critical to ensure that your credit score is healthy before applying for a home loan. A good credit score not only has an impact on the approval of your loan but also on the interest rate offered by the bank. A healthy score means less non-repayment risk is associated with your loan application, so banks can offer lower interest rates.
At the same time, if your credit score is lower, it is wise to postpone your plans to buy a house rather than get a loan at high interest. After all, a bad credit score could also mean that you might not be able to pay back your loan on time.
- Keep your documents ready
Documentation is a crucial part of any loan application. Lenders will have to verify many things, including your identity, before approving your loan request. Therefore, keeping your documents ready might speed up the process.
- Ensure you can afford the EMIs
Building a home is often a milestone, but some people jump to it before they are financially ready. Availing of a home loan means years of repayment, and it requires a steady income. Your income should be able to cover the home loan EMIs along with other expenses.
A home loan EMI calculator can be of great help here. You can use the tool to calculate your EMIs using the loan amount you require and the interest rate offered by the bank. Once you know the EMI will you need to pay, analyse your income and monthly expenses to see if you can comfortably afford the EMI every month. Also, ensure you have high job security, as home loans often have longer tenures due to the higher loan amount.
What are the documents required for a home loan?
Banks would need your identity and address proofs to process your home loan application. You can submit a copy of your Aadhaar card, passport, driving license, election ID card, etc.
You will also be asked for documents related to the property you are buying and your income statements to prove that you can comfortably repay your EMIs.
You must take time and consider your finances before taking a home loan. Once you have done so, shortlist the lenders offering the best terms. Go with the lender that allows you to customise your repayment plan and offers an affordable interest rate.