Buying a house has long been one of, if not the most important, life choices for salaried individuals and working professionals. Generations of the working-class people have long been putting their savings towards investing in a house, even if that meant sacrificing dreams and desires to secure a roof over their heads. It has long been debated whether living in a self-owned house is better than living in a rented one. Sure, both have their respective advantages and disadvantages but often, the factors affecting this choice is the budget. To solve this dilemma, we have a solution called home loans.
Home loans provide the necessary funds to purchase a dream home when you do not have sufficient amount available. We, at Home Credit India, make applying & affording home loans, easy, accessible and affordable, all at once so that you can take the first step towards making your dreams come true. Even though we assist you at every step of the way, we’ve listed down three important things you should know before applying for a home loan. So, read on…
- Things to consider while applying for a Home Loan
- Your CIBIL Score: Check your CIBIL score before applying for a home loan as it determines your creditworthiness. Before beginning the loan application process, make sure you have a clean credit history. If the CIBIL score is good, you can bargain with the home loan provider for a reduced interest rate, waived processing fees and other concessions
- Your Budget: Taking an inventory of your savings, liabilities, and financial obligations should be among your first steps. You can calculate how much money you’ll need to put aside per month for living costs, savings and investments. After that, you can plan for how much you’ll have to pay in EMIs for your home loan with the help of an EMI calculator. Keeping all these factors in mind will help you arrive at a reasonable loan amount that you can easily afford
- Your Documents: Your loan provider, as well as aggregator websites, will give you a list of the required documents. You should keep all these documents & their copies ready for the documentation session with loan provider. It is also advised to consider insurance options to cover your home loan liability so that you are covered in case of an emergency
- Your Disbursement: Once you’ve applied for a home loan and it’s been approved, consider how you want the funds to be distributed. It can be paid all at once or in instalments. Many loan providers will disburse loans in instalments depending on the progress of the property, if it is under construction (this will be assessed by the provider) or a full loan amount disbursement can be done in case of the property is fully constructed.
- Things to consider while closing the Home Loan
There are multiple ways of closing your loan. You can discuss your options with your provider at the time of applying for the loan. You have the option of fore-closing or partially pre-paying your loan.
If you choose to fore-close your loan before its original tenure date, you might have to pay some fore-closure charges (only in case of a fixed interest rate). If you choose to partially pre-pay your loan, you might have to pay an additional amount, over & above your EMI. However, this additional amount will be realized towards reducing the principal amount, thereby reducing the interest. This means, the more you pre-pay and the longer you pre-pay for, the more you will save.
- Accruing the Tax Benefit
At the beginning of each year, your Home Loans provider will send you a statement outlining the principal and interest owed for the year. They will give you a statement towards the end of the year detailing how much you have repaid. You can utilize this statement to get a tax benefit from your employer.
In conclusion, getting a home loan can put you on the path of owning your dream home. With a plethora of feature and benefits, you can finally realize your dreams. However, we do advise to keep these 3 important things in your mind when you do decide to apply for a home loan, do your research wisely and take the plunge. And for everything else, there’s Home Credit!