Buying a house for the first time can be an exciting yet, nerve-racking experience. However, if you have decided to buy a place of your own with the help of a home loan, it is important to consider all your options. Make sure to do a thorough research before you take the plunge. This will keep you well-informed and prepared to handle any situation.
To assist you further, we have listed below a few home loan tips that will guide you through the process, and make your experience an enjoyable one:
- Choose a Good Lender: Once you have made the decision to buy your first home, your initial step should be to select a lender. Ideally, you must pick a financial institution that offers ease of documentation, better mortgage rates and maximum benefits. Besides, you must also check if the lender provides top-up loan services and applies any penalty charges in case of prepayments.
- Credit Score: If you are a first time home buyer, you must have a good credit score. Most banks will take this into account when they issue a loan. If you have a score between 700-750, your loan is likely to get approved without any hiccups. Anything less than 550 may give banks a reason to reject.
- Know Your Options: Once you learn all about loan eligibility, down payments and EMIs, you can pick a financial institution that offers you the lowest mortgage. Ideally, you should check if the project you are planning to invest in has bank loan approval or subvention schemes.
- Plan Your EMI and Down Payment: Once you make the decision to purchase a house, the first thing you should do is calculate your EMI. This will clear the picture for you. Experts recommend that individuals taking out a loan shouldn’t agree to pay more than 50% of their monthly income as their EMI amount.
- Pick Your Rate of Interest: There are two kinds of interest rates you can choose from – fixed and floating interest rate. In a fixed rate home loan, the interest remains the same, irrespective of a change in the market conditions. So, if you choose that, you will have to pay the same EMI amount throughout the tenure. Conversely, in a floating rate home loan, the rate of interest keeps fluctuating. So, before you pick any one, weigh the pros and cons and select wisely.
- Make Paperwork Painless: After choosing your lender and making all the other arrangements, start putting all the papers together. Once you have everything at your disposal, you can begin the process easily.
With the help of such tips and a little bit of research, you’ll be able apply for a house loan successfully. But, one thing that can help you simplify the process further is a home loan calculator. Here’s how:
- A home loan EMI calculator helps in determining the loan amount that can be borrowed, and the equated monthly instalments (EMIs) that need to be paid.
- It thereby assists in checking the overall affordability of the loan.
- It also helps in checking the interest rate percentage as well as the eligibility for the loan.
- It allows you to assess the tenure of the loan.
- It also helps in selecting between a floating or fixed rate of interest.
- Last but not the least, it helps in comparing prices and choosing the lender that offers additional benefits.
Now that you are aware of the things you should keep in mind before applying for a home loan, it’s time to start looking for a place that you can truly call your own.