So what is a home? The answer depends on who you ask. It is many things to many people. A place of residence for one, an emotion for the second, an identity for the third, an investment for the fourth, or just collateral for the fifth. Irrespective of which category you belong to, one thing is for sure it’s a valuable asset we all want to own.
It costs a lot to buy or build a home. And one of the most popular ways is to get it financed via a home loan. Not only it can secure your savings which you can use for other emergencies of life, but it also gives you the flexibility to pay the debt little by little over a long period. In addition, with a home loan, you can save a huge amount of money that would otherwise go as tax.
Now, there are countless home loans available out there. And choosing the one that serves you the best is quite confusing and overwhelming. And we are here to help you navigate through this maze and shortlist the best home loan plan for you with 5 powerful home loan tips.
Have a high CIBIL score: the higher the better
Home loans involve huge amounts of money and banks need the surety they are lending it to the right person – one with a good credit history. And the Credit history is mirrored and quantified as CIBIL Score. The higher your CIBIL Score, the more trustworthy you are to return the money, and the more loan amount you are worthy of getting.
A CIBIL score of 750 or above is excellent but you are good to go even if you lie between the ranges of 650-750. If it’s lower, try to improve the score first before applying for a home loan. Banks might even lower your interest rate if you have a CIBIL Score high enough. So having a higher CIBIL Score is a great advantage.
Savings: the more the better
The more is your saving, the more you can dedicate to the down payment amount. In other words, the more down payment you can make, the lower will be your EMI and the easier it will be for you to repay the loan. But what is the down payment to begin with?
The Down Payment is the money you pay upfront (in advance) to the bank. Depending on your loan amount, the down payment amount can vary between 10%-30% of the debt (or home loan) you take from the bank.
With age, your family, liabilities, and responsibilities increase and so will your monthly expenses. It can even skyrocket for some. Lower EMI gives you breathing space to repay the loan at a lower interest rate staggered over a longer duration. And having a good savings can help you lower your EMI and liabilities.
Use a home loan EMI calculator
How much EMI you can get majorly depends on 3 factors: your monthly saving, loan tenure (vary from 15-20 years), and rate of interest (the less the better). Keeping the last 2 options constant, go for the bank that gives you a higher loan for the given salary or monthly income.
Every Bank gives you the option to calculate your EMI – offline as well as online. The thumb rule is that half of your monthly salary is considered as your monthly saving and the more is the saving, the more loan you deserve. As per the present trend, you can avail of a home loan of up to 25 lakh rupees for a monthly salary of 40 thousand.
Knowing how much EMI you have to pay gives you a good idea of if a property is affordable or out of your range.
Compare the home loan offers of different banks
Just like different banks give you different loan amounts for the same salary or income, similarly they vary in terms of how much money the debtor (you that is) will end up ultimately paying.
Ideally, a bank with a low-interest rate on a home loan will make you pay less and thus should be preferred. But that’s not all. There is other stuff such as home loan processing fees, application fees, technical valuation charges, and other expenses you have to consider before finalizing a particular bank for availing of a home loan. Besides, we’d suggest you go for the maximum loan tenure which is of 30 years, and keep your EMI manageable.
All in all, go for a bank that provides the best value and thus peace of mind.
Keep your documents ready
The bank will ask for certain documents to successfully process your home loan application. And the list of documents required is subject to which bank it is and your type of employment – whether you are salaried or self-employed.
Some of these documents are your recent salary slips, ITRs, bank account statements, and so on. And it pays to be ready with them in advance so as to avoid rush and hassle at the eleventh hour. You can easily get a list of required documents for a home loan by visiting the given bank’s website or calling them directly.
Wealth Clinic wishes you luck in happy home loan hunting!
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