Dreaming about your own home and buying it is indeed a significant decision in your life. And it remains no doubt that it requires proper planning of your finances. Even a small error in your application can ruin the process, and you will end up facing disruption in the budget. Home loans are long-term borrowings and are of the great sum. Housing loans are long-term financial commitments, and the applicant’s credit score matters a lot.
You must check this piece if you are also planning to fulfil your dream by buying a home. This works as a handful guide for proper planning to get a home loan in the form of questions.
Let’s begin!
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Do you have a good credit score?
As stated before, the applicant’s credit score plays an important role in getting final approval for the home loan. Most lending institutions offer interest rates based on the applicant’s credit score.
Applicants with good credit scores ensure that the bank or other lenders levy lower risk premiums, and eventually, the rate of interest charged will be lower and vice-versa. So, improving your credit score is integral to getting your home loan approved.
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Do you have a stable income along with an emergency fund?
Getting a loan for a longer tenure always burdens the applicant financially. Thus, it is important to have a stable income. Since you are getting it for a longer tenure, you must ensure that you have a regular source of income for the long term. Having an emergency fund is also crucial to deal with any unforeseen circumstances.
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Can you afford the margin money?
Before you make the home loan application, make sure that you have the margin funds available to you. Usually, lenders fund up to 90% of the property value, and this happens in case of low-value loans. But in high-value loans, the financing institutions will offer up to 75% of the value. The applicant shall pay the pending amount, and this is known as down payment charges.
In most cases, it is seen that people don’t have the margin fund, and they avail another loan to arrange the margin funds. This can be the biggest mistake anyone can do. Only when you have your funds for the margin money, then proceed with the loan.
Not just the margin fund, the applicant should also consider other expenses like registration of the property, wall painting, interior decoration, and many others. All these expenses are not covered under the loan amount.
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Are you buying a legitimate property?
Before you finalise the property, ensure you have all the documents verified. At times, builders or promoters don’t have a valid paper to show, and they somehow manage to get approval from the municipal body for selling it. Hire a professional lawyer and hand over all the papers to get them checked. This will give you peace of mind that you are investing in genuine property.
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Are you buying a home for end use or for investment purposes?
If you are planning to buy a home for end users, you need to consider different factors. Make sure the property fulfils your family’s requirements in terms of proper locality, size, infrastructure, amenities, etc. But if you are doing it for investment purposes, calculate the annual yield percentage from the rental income, capital appreciation value, etc.
After satisfying answers to these questions and many others, submit your papers to a genuine home loan agent and move ahead. This is a major financial decision you will make, and you cannot afford to have careless behaviour. Please use the blank space below to share your thoughts, suggestions or queries in case you have one.
