Buying a home is a milestone in everybody’s life. Given that it is a dream finally coming true, you try to avoid any mistake possible. One of the most essential parts of buying a home is securing a home loan. You would want to ensure you are doing everything right when you are applying for a home loan.
If you are applying for a home loan for the first time, it is only natural to be confused and unaware of certain things. This is why we bring an easy guide to offer you more clarity.
Here are some dos and don’ts of applying for a home loan.
- Do the Necessary Calculations
How would you calculate the amount you need as a home loan? It depends on an array of factors, including the cost of a home, the percentage a bank or financial institution would sanction and your initial down payment.
So, first things first, you must do some calculations before applying for a home loan. This includes calculating the amount you need to pay as the initial down payment. The remaining sum can be availed as a home loan.
Following that, you must list your current liabilities and expenditures. This will help you calculate the amount you can afford to pay as EMIs every month.
- Check your Credit Score
It is easy to establish that financial service providers and banks would like to get their money back if they grant you a home loan. But how would they know for sure that you will pay them back?
The answer is by looking at your credit score. It is an evaluation of your credit behaviour and tells the lenders how you have availed loans in the past and if you had paid them back on time. A credit score is a cornerstone of your home loan application. It evaluates your creditworthiness.
So, if you are planning to apply for a home loan, ensure that you have an excellent credit score (750 or more). A high credit score boosts the chances of faster home loan approvals and may also help you get lower interest rates.
- Factor in Affordability
The last thing you would want is to go bankrupt while paying your home loan EMIs. Hence, you must choose an affordable option to ensure you stay clear from financial crunches and lead the lifestyle you want, all the while paying your home loan EMIs. Ensure that you keep the EMI amount within 45% of your income.
Secondly, you may choose lower interest rates, but don’t let it be the only driving factor. You may want to choose a longer tenure with it, but so that the cost of the home loan goes up as the tenure lengthens.
So, decide what suits you the best: lower interest rates but longer tenure or marginally higher interest rates but shorter tenure. Pick the most convenient and affordable option for you.
- See if the Lender Offers you Enough Flexibility
The repayment of a home loan can go up to 20- 30 years. A home loan is not just an investment in your home but in your future, so you should choose an option that offers you flexibility in the long run.
As a personal’s financial strength increases in the long run, you should have the flexibility of increasing or decreasing your contribution as EMIs. You can also go for lenders that provide you breaks in EMIs, promising flexibility in repayment without affecting your creditworthiness.
- 5. Don’t Fall for Lower Interest Rates
Lower interest rates can be tempting. But what if these lower interest rates compromise the quality of the product and service in the long run? Remember, interest rates can fluctuate over the years. However, if you choose a reputed player, you may see relatively fewer fluctuations over the tenure.
- Don’t Undermine the Customer Service
You would want to avoid getting into fights with financial institutions over services, interest rates and hidden charges over the years. So, to avoid that, you must give importance to the customer service of the company you have availed a home loan from. Always check reviews, testimonials, and news before you choose lenders. Select reputed names like Tata Capital, which has had a good reputation for offering excellent financial products and top-notch customer services over the years.
Discover Tailored Home Loan Solutions
Whether you’re a first-time homebuyer or looking to refinance, this blog provides valuable insights to make informed decisions. Remember, a well-informed borrower is an empowered one. Consider partnering with Tata Capital, a trusted name in financial solutions. Their expertise and commitment to customer satisfaction can help turn your homeownership dreams into reality. Take the next step towards clarity and financial stability—visit their website today and explore the tailored home loan solutions that suit your needs.
