Home Loan Tips for first time Buyer
With the popularity and easy availability of the loan, everybody is bound with that for one thing or the other. The most common loan is a home loan, millennial are just waiting to get a job and the moment they get, they achieve the most longed dream – of getting a luxury villa.
With this excitement, sometimes we forget to look into the details of the things, which can become one of the biggest reasons for loan rejection.I can understand getting a loan is a little confusing with so much of different banks and again hundreds of policy in each bank and then a rejection after that can fuse anybody’s mind.
Hence, here I have listed some of the important things to consider about both banks as well as themselves, when one’s are planning to get a home loan.
>Consider your part:
Taking a home loan is not just a part of the bank, but also you should consider yourself too. Let’s say you research all about the bank to get the loan from but you forgot to keep your eligibility criteria clear, then chances of getting the loan will turn to less.
Banks always prefer a client with a regular income over a self employed man. The reason is the more the stability of income is there, the less risk to the bank regarding returning of money. If you are working in a reputed company then the chances become higher. The bank usually gives loans of 50/60 times of your salary.
2. Down payment:
The bank only gives 80-90% LTV (loan to value ratio) remaining amount you should arrange. So, save the down payment amount before applying for the loan.
3. Existing Loan:
Before giving loan, bank checks all of your expenses. One of it is existing loans. It feels that if you are already paying loans for other things then, you may feel difficult to pay to them.
Banks expect you to have a long tenure to repay the loan, hence your retirement age should not be close. A middle age person is most preferable. As they have a previous job experience, so the job is safe and at the same time they do have a long time to pay the loans.
5. CIBIL Score:
CIBIL, Credit Information Bureau (India) Limited create a report called CIR (Credit Information Report) and based on that they assign score to the people according to their past loan history and credit card repayments. The score is assigned between 300 to 900 and are called the CIBIL Trans Union Score. To get your home loan sanctioned, you need to have around 700 to 750 CIBIL score.
>Check with banks which provide Home Loan:
Now when you are done with the above things, you can shift your concentration to the banks. This is very important that you compare all the banks and policies and read the entire document very carefully before going for any option.
1. Rate of interest:
There are 2 types of Interest Fixed and Floating. Fixed Interest rates will be the same in the entire tenure. But the Floating Interest rates vary with the market rate. So, decide which one you want to go prior to taking any decision.
2. Fees & Charges:
There are many fees and charges involved in home loans, the main are listed below.
- Processing fee
The processing fee for a home loan is a one time fee taken by the banks for processing the loan. It differs from bank to bank; so, one should check all the bank’s fees on home loans. Usually the fee varies from 0.5% to 1.00% of the total loan amount.
- Annual Fees
Home loan ongoing fees are charged every year for administering your loan, which is called as annual fees. Do check for all the fees related to the loan.
- Penal Charges
Penal Charges is the penalty charge which one need to pay if they are failing to pay the EMI on time.
3. Loan Tenure:
The loan tenure is the duration within which one can clear their bank loan debt. The more the tenure time, the more the interest amount one needs to pay. Check how much you can pay in a month and then decide on a most convenient tenure for which you can avail a home loan.
4. Documents required:
There are certain documents which are required by the bank to proceed with the loan. Such documents are KYC documents, income proof, bank statements, etc. One should make every document ready before applying for a housing loan.
5. Your approximate EMIs:
The EMI is the monthly instalments, one need to pay to clear the home loan. It is mainly depends on the interest rate, loan amount, tenure duration etc.
6. Easy Foreclosure/prepayment options:
Check what is the procedure and fees involved if you want to clear your debt before the time. The above are the basic things which one should definitely consider, if they are planning to buy Villa or apartments for sale with a loan. So, do go for it with more preparation and 100% assurance for getting the most accurate loan possible.