Home loans are the financing options preferred by individuals who desire to own a residence. The significant loan amount, combined with a flexible tenor, can aid greatly when looking to purchase a home. 

However, availing funds through such a loan obligates applicants to fulfil home loan eligibility criteria and consider related factors. Avoiding the rules laid down by a lender can lead to application rejection. 

According to a report, the Indian real estate market is predicted to reach USD 1 trillion by the year 2030. This growth is predicted to be driven by the demand among the middle class for better living conditions and the various government reforms.

The current home loan borrowing rates are low due to the RBI’s stance to keep the repo rate at 4%. This factor is another encouraging aspect of why one must apply for a housing credit at present.

To make the borrowing lucrative, individuals should also consider some additional factors apart from home loan eligibility. Some of them are discussed below.

What are the things to keep in mind before initiating a home loan application?

Availing a housing loan is a long term commitment; borrowers should keep a tab on the factors that affect its processing. This will aid in making the borrowing successful.

Checking the credit score

Lending institutions are always in the risk zone of facing defaulters. To avoid this risk, they lay down home loan eligibility criteria. With every loan application, lenders perform hard inquiries to scrutinise a borrower’s credit profile. Failing to keep up with the parameters can lead to loan application cancellation. 

However, applicants managing to maintain a 750+ CIBIL score and remarkable repayment history are always preferred. They can negotiate with lenders to receive favourable terms, which lower the repayment obligations. These borrowers can easily substantiate their reliability in a lender’s eye and simultaneously gain additional services.

For instance, many HFCs extend pre-approved offers to borrowers with high credibility. These offers make the loan application process simple and hassle-free. One can find these offers on financial products like home loans, loans against property, etc. Check your pre-approved offers by entering a name and contact number today.

Confirming the documentation

Simply fulfilling the home loan eligibility criteria won’t aid in loan processing. Every applicant needs to submit specified documents to substantiate their identity, address, income stability, etc. To streamline an application process, contacting a lender regarding the document requirement would be beneficial. 

Some of the documents that are common for most lenders are–

  • KYC documents
  • Income proof like salary slip or Form 16 for salaried applicants 
  • Self-employed applicants need to give TR papers and a profit & loss statement 
  • They have to submit papers proving business vintage of at least five years.
  • Account statements for the preceding six months.

Loan tenor

Loan tenor is again an essential element that every home loan borrower must check. Based on the tenor, the repayment structure is decided. Usually, choosing a long tenor can aid an individual to reduce the EMI outgo. 

However, it will increase overall interest outgo. On the other hand, individuals who go for a short tenor can reduce interest outgo and save efficiently. Though it will increase their EMIs, it will help them to save on total repayment. 

To simplify the point, here is an example. Let’s say an individual has avail a home loan of Rs.30 lakh for 20 years. Here the interest rate levied by the lender is 8%. EMI stands nearly at Rs.26,000, and interest payable will be Rs.30,000 approx. However, if tenor is reduced to 15 years, the EMI will be Rs.28,000 approximately. 

Added charges

Similar to every other credit form, a home loan also levy additional charges. This can include processing fees, foreclosure charges, late payment charges, etc. Having a clear idea about these charges would help an individual understand the cost involved and plan accordingly.

Apart from the mentioned factors, individuals should keep a tab on the updated list of home loan eligibility criteria of a preferred lending institution. However, if confusion prevails, one can use a home loan eligibility calculator and evaluate their loan availability. They can check reasons for failing the parameters and work for improvement.

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