Buying a home is always tricky as you have to identify an optimal residential area, the right locality within that area, and bags full of money, which is not the case now as all the big-ticket transactions are mandated to be completed digitally.
According to a report by the Noida-based property e-marketplace MagicBricks, 33% of Indians wanted to purchase a home that is priced below Rs 50 lakh, with 67% of the Indian homebuyers contemplating opportunities to invest in multistorey apartments in the year 2021.
Rise of Home Loan
People are progressively looking forward to owning a piece of land in their name, be it a flat in a multi-storey residential complex or the entire bungalow itself. With the humungous rise in the number of nuclear families, the apparent ease of movability, prompt relocation and distinctive choices of cities/towns for buying or building your own house, the demand for new houses has been growing at a thoroughly rapid pace.
As far as arranging the sum of money to purchase or construct your own house is concerned, a large section of people remains short of the complete fund as for most of the middle-income salaried folks, it takes the savings of a lifetime to own a house, while on the other hand, a handful of individuals manage to buy it with upfront payment in entirety.
With the Government of India’s push on affordable housing and the umpteen demand for new homes, there are numerous offers from various public and private sector lenders and housing financiers. The individuals who are looking forward to applying for a home loan often find themselves at crossroads due to a plethora of lenders and subsequently customised home loan offers.
1. Clearly Identify Requirements & Repaying Capacity
This should be an important classifier when it comes to taking a home loan for purchasing. For instance, you should be adequately aware of all possible options that suffice the requirement of your household, considering the need for space in the years to come. There can be a long list of key things that make up an ideal house for you, the home options which are ticking most of the requirements should be outrightly prioritised.
The budget and requirements go hand-in-hand as you can’t have a set number of benefits under a restricted budget, as well as you cannot extend your budget beyond your earnings or repaying capacities. Finding the right balance between the budget and amenities is the key to shortlisting the optimal house for you and your family.
Many individuals tend to overlook these things or fail to adjudge the minuscule requirements and stretch their budgets unknowingly for the sake of some flashy and lucrative advantages that are actually not required in the first place and are also not of essential use.
2. Review your Eligibility
The eligibility of the home loan applicant varies indefinitely which is entirely subject to the current age, quantum of earnings, the indicative credit score, past financial relationship with the bank, the existing sum of debt burden, and historical repayment behaviour.
There can be instances when you might not be in the optimal range for one or more of the aforementioned facets. For instance, if a person is already obliging an EMI of Rs 30,000 with a monthly income of Rs 60,000, then he is not rightly equipped to service an additional home loan EMI of Rs 15,000 or Rs 20,000.
Similarly, if you have defaulted on any of your recent repayments or have a high credit utilisation ratio, or have aggressively applied for new credit products, then the lender or housing financier may not voluntarily agree to approve a home loan of large size, considering the dent on your credit score.
Moreover, an individual with a relatively low income of supposing Rs 30,000 a month won’t be able to qualify for a home loan which has an EMI of Rs 20,000 at the maximum possible tenure. Likewise, the age of a home loan applicant plays an indispensable role in the eligibility as the bank will be quite reluctant to offer a home loan with a tenure of 15 years to a person who nearing the age of 50 years.
Conclusively, the home loan applicant should evaluate eligibility on various parameters and should apply for the home loan only if he’s fully entitled to get the big-ticket facility. Also, he should be competent enough to service the additional burden of home loan EMIs for the next 10, 15 or 20 years.
3. Home loan offers: Compare Closely
At a certain age, monthly income, credit score and existing set of debt repayments, a person can qualify for home loan offers from different banks, as well as housing financiers. By and large, all the offers are similar in nature in terms of the amount that will be sanctioned after the approval, the effective rate of interest, the tenure of repayment, mode of repayment, etc.
The contrast between the offers arises from the nature of the interest rate, whether it is fixed or floating, the applicable processing fees, the prepayment/part-payment charges, penalty charges on missing an EMI, exceptional home loan tax benefits, and other minuscule terms and conditions.
Checking the home loan offers one after the other by visiting the concerned branches or websites can be a soul-destroying task as every time, you’ll be required to furnish your personal details to the respective officers or the digital user interface system developed by the bank. Moreover, each bank will respectively pull your credit score to gauge your eligibility, and the subsequent denials from the lenders will take a toll on your credit score.
For a seamless, interesting and immersive experience, you can get in touch with MyMoneyMantra, through which we not only help you identify and compare the right offers but also make sure that the users get the appropriate assistance throughout their home loan journey right from scratch till the final disbursement.