Buying a dream house is something everyone desires at some point in life. However, one must take into account numerous factors before even considering it seriously. A house demands a hefty and long-term investment, so it is advisable to weigh your options.

Contrary to popular belief, home loans have gradually become an affordable option for the general public. It can help you maintain your savings portfolio while helping you buy the perfect home. The market offers numerous loan providers offering a comfortable interest rate on housing loans.

But merely knowing that will not help you find the best option. Looking for the right kind of financing can be excruciating, but focusing on some key aspects can simplify your search. On that note, here are the top factors everyone should consider when choosing a home loan.

Factors to Consider While Finding a House Loan

Eligibility Benchmarks

Not every home loan will suit your needs, and you will not be eligible for each loan either. Thus, it is pivotal to start the search with a self-assessment. First, calculate the loan and EMI amount with a home loan EMI calculator you can afford monthly for the long term.

Account for any interest rate change, income fluctuation, and important life decisions. Conclude every loan before applying for the home loan to improve your eligibility. Depending on your repayment capability, banks will provide up to 80% of the home’s cost. Thus, you should improve your portfolio before making the final call. You can use a home loan eligibility calculator to get an estimate of the maximum home loan amount you may get based on a few parameters such as your repayment capacity and the value of the property. 

Shortlist Available Options

With the market being inundated with loan providers, it will take some time and effort to find one which is right for you. You can narrow down your options by making a list of the best loan options based on three parameters: the down payment required, the interest rates offered as well as other fees and charges, and maximum loan amount you can get. Then, compare your selected options  based on other factors such as maximum repayment period, customer service, etc. and find the lenders offering the best alternatives.

Since home loans involve hefty funds, try to assess every minor detail in the loan application. If necessary, consult a professional to ensure the process stays transparent.

Credit Score

A low credit score is one of the primary reasons why lenders reject most applications. Your  CIBIL score holds significance since it directly represents your repayment capabilities and tendencies. It helps banks and lenders decide whether they can trust you.

Naturally, the higher the score, the better chances you have. Try to keep your score above 700 so that your application does not get rejected. Maintaining a score of 740-799 is better, while anything above 800 is exceptional. A higher CIBIL score will also translate to a comparatively lower interest rate. 

Occupation and Age

Your age and occupation play a big role in your loan application. Banks and financial institutions always prefer individuals aged less than 45 years with stable occupations. Moreover, if the primary loan applicant is salaried and holds a job with a reputed company, their ease in qualifying for the loan will be higher

Banks account for these factors to assess your repayment capability and credibility. For example, if you have switched jobs frequently in the past, it will negatively affect the lenders. In addition, most banks may not entertain the application if the applicant is above 50-55 years old, as the age cannot exceed 65 years by the time of loan maturity, and most borrowers require at least 20 years to repay a home loan.

Lender’s Reputation

Before making the final decision, ensure you are choosing a well-reputed lender. Do not fall victim to fraudulent or questionable schemes offered by individuals who make promises that sound too good to be true.  Customer service plays a major role when borrowing a large amount, so you must be careful. You do not want to keep facing new charges every month.

While the housing loan interest rate is critical, evaluate other aspects as well. For example, see how customers rate the institution and how easy it is to approach the executives. This can significantly simplify your repayment process as the repayment is a long-term process. 

Pre-Loan Requirements

Every home loan provider will impose certain pre-loan requirements, which you must carefully provide. For example, submitting incorrect and false documents may lead to rejection. As a result, you must ensure that all your documentation is in order. Additionally, you must look for any extra charges the institute may require before applying.

See what processing fees the lender is charging beforehand. Generally, the fee stands at around 1%, but the right institution may ask for even less.

Property Resale Price

While this may sound cynical, you should evaluate the home’s resale value before buying it. An expensive home means a higher down payment and longer repayment tenure.

This is where resale value comes in, influencing the loan’s term. Depending on the amount, the lender will decide the repayment period. A higher price means you need more years to repay it. So, find a home that bodes well with the loan providers as well.

In Conclusion

Buying a house is tough, but affordable home loans have simplified the process for many. While the market offers numerous loan options, choosing the most suitable one can be challenging. That is why you must account for multiple factors before starting the search. This article has mentioned the top factors to consider while looking for a house loan. So go through them and find the best option today.


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