Taking a home loan is one of the wisest decisions, instead of renting out property every year. It allows you to buy your dream abode even when the property prices are skyrocketing high in inflation times. However, it’s a decision which needs meticulous planning, research, consultation, and groundwork. Else you would end up paying exorbitant interest rate fees and might shatter in your financial goals of near future. Thus, to ensure that it doesn’t happen to you, you can go through this article that highlights 4 essential things you should do before you apply for a home loan:
Check your credit score
Your credit score plays an important role while availing a home loan, in fact, a good score is required for any form of a loan. A good score will boost your loan eligibility, give speedy approvals and most importantly give you the power to negotiate with the lenders for low-interest rates on your housing finance.
A credit score of around 750+ is considered good enough to negotiate with the lenders for some attractive deal. You can improve your score by paying your credit card bills, prior personal loans well on time. Another good tip would be to try and use your old card if you have several credit cards. If you have any outstanding EMI ensure that you pay it, maintaining a good score for a couple of months and then go for your housing loan application
Make efficient use of EMI calculator
In olden days people use to sit manually to apply for a housing loan, however, the solution was not guaranteed. In this internet-based era, you can use home loan EMI calculator that will help you plan your monthly EMI properly and within your affordability. It’s the most essential part of sound financial planning to know what would be the EMI you can afford and if you can maintain the constant ratio of paying it till the end of tenure. You can use an online EMI calculator to estimate almost accurate EMI, the principal amount, interest rate outgo, and tenure you are planning to apply for. All you have to do is key in some details such as your age, income, job details, loan requirement, preferred interest rate, and tenure. Within a couple of seconds, you will be provided with the exact interest rate component, principal amount, and the desired EMI amount. It helps you stay well prepared and manage all the cut downs in your expenses each month to pay your EMI comfortably.
Any lender will provide up to 80-85% of the loan amount, and therefore it makes sense to save for a slightly higher down payment amount. The higher down payment means you are borrowing less and the interest rate will also be lesser. It’s important you save this amount and then make a home loan application online or in person. Also, you can save a bit more to combat again situations like job loss, recession, ailing health issues, etc. Lenders will be happy to see you preparedness and quickly sanction the loan amount.
Opt for an insurance policy
Unfortunate incidences never come knocking at your doorstep. In case your unexpected demise, your family will be left mentally deteriorating and financially in a big burden of loan repayment. It will fall on the immediate loved ones who might not be earning at that moment. In such a dire situation, to ensure they’re able to handle financial loan with ease, it would be wise to opt for certain term insurance policy. Premiums are quite marginal and the sum assured is really high enough and more to cover the repayment of your home loan.
Follow these 4 essential tips and you can get a smooth home loan application processing. Good luck and buy your dream home soon!