According to an article published in the Financial Express, home loan applications across Indian cities have witnessed a 25% to 40% rise. These figures are not surprising given that mid-range and high-end properties are seeing increased demand, and home loans are the most preferred option for several individuals when it comes to purchasing a home. While finding the right property is just one important step in the process of owning a home, opting for the right home loan is another equally important step.
To that end, selecting the right lender and employing certain strategies such as planning the down payment beforehand is vital. Various factors come into play in this regard and aspiring homeowners must do the due diligence to ensure they can avail the best home loan offer. Below mentioned are a few tips & tricks that can help prospective borrowers in that regard:
Save for down payments
It is imperative to plan one’s finances strategically before acquiring a home loan. The required down payment for a loan can range anywhere between 2.25% to 20% of the purchase price, depending on the amount and lender. One must first form a monthly budget and start saving funds accordingly. These funds saved would help to pay the down payment.
An easy and convenient way of saving money on a monthly basis is to get funds automatically deposited into an egg fund.
Checking one’s credit score
Credit score plays a vital role in the approval of a home loan as it determines a borrower’s creditworthiness. To have a decent credit score, one must possess a healthy financial record. Punctual repayment history is an example of that. Being responsible for repayments also opens doors for the borrower to avail several offers from NBFCs.
For instance, financial institutions provide pre-approved offers to existing borrowers that help in simplifying and accelerating a lending process. These offers are provided on various financial products such as home loans, loans against property, and more. You can check your pre-approved offer by providing a few details such as your name and contact number.
Compare various offers
Every mortgage is not equally created. Several differentiating factors can make one home loan more expensive than the other, even though both credit options come at the same home loan interest rate. Therefore, to correctly compare offers, it is crucial to understand all the various components contributing to determining the mortgage price.
Borrowers can also face situations where they might find the right home with a lower interest rate from a lender after acquiring a home loan with a higher interest rate. One can opt for a home loan balance transfer to transfer the outstanding loan amount to the lender, levying a lower rate in such cases. Apart from this, there are several benefits of a home loan balance transfer.
Assembling financial documents in place
Home loan lenders ask for several financial documents while applying for a home loan. The application stage in the home loan process gets accelerated if these documents are assembled beforehand. Borrowers must at least be ready with the following documents:
- Payslips of past few months
- Tax returns of last two years
- Current account and brokerage statements
Other than the aforesaid points, you shall also be judicious about the loan amount and tenor. To that end, you can use a home loan calculator. It lets you calculate how much home loan EMI you can afford, which goes a long way in managing the repayments properly and making an informed decision regarding purchasing a home.
As a home loan is a long-term, big-ticket financial commitment, one must opt for the most appropriate one. The above-mentioned tips would guide you through that.