6 things to note before applying for a Home Loan

A home is a place where you not only nurture your family and make memories for a lifetime but is also an asset that adds to your net worth and offers security. 

Since property prices are skyrocketing, it may be difficult to acquire a home with your savings alone. 

To help you take a step closer to your dream home, lenders offer an excellent financial solution in the form of a home loan.

Key Points to note before applying for a Home Loan

1. Home Loan has Eligibility Criteria

  • You should be a resident Indian.
  • Salaried applicants age between 23 and 62 yrs and self-employed between 25 and 70 yrs.
  • Work experience for salaried 3 yrs and for self-employed 5 yrs.

  • In addition to this, you are required to disclose sufficient income with which you can repay your loan.

2. Your Credit History

The interest rate you pay on your loan is linked to your credit score. CIBIL score of 750 or more reserves a lower interest rates. 

CIBIL score between 750 – 650 has to pay a marginally higher interest rate and below 650 can be a challenge.

3. Compare Interest Rates
The home loan interest rate is one of the key factors that determine the cost of borrowing. Don’t forget to compare interest rates among various banks & NBFC’s.

4. Home Loan requires documentation

  • KYC documents of the Applicant.
  • Income proof like Salary slips, Bank statements.

  • Business proof & Income tax return for the self-employed.
  • Legal documents of the property.

5. Home loans come with two types of interest rates
There are two types of interest rates on home loans: fixed and fluctuating. 

In the case of fixed interest home loans, the interest remains unchanged throughout the tenor of up to a few years until the reset date is reached. 

On the other hand, interest rates of floating home loans fluctuate as per the market scenario.

6. Home Loan EMIs increase with longer tenor.
Your home loan EMIs are calculated based on your loan amount, tenor, and interest rate.

It is natural that a high-interest rate adds to the home loan cost, which results in higher EMIs. The length of the tenor also has a significant impact on your home loan. 

The longer the tenor, the higher your EMIs will be, as the interest adds on with each month.

Now that you know the important things to consider before availing a home loan, go ahead and compare loans offered by lenders to get the best deal.

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