Buying a desirable home is a dream for many; thus, leaning toward a home loan is quite a natural phenomenon. Today most lenders and financial institutions offer home loans. It is a type of secured loan where the borrower mortgages the home against which they receive funds from the lender to buy the mortgaged home. Some of the major things to consider in a housing loan include offered interest rate, processing fee and other charges if any, and overall capital required.
Tips to ensure the best housing loan experience
The following tips can help borrowers get the best experience for availing of a housing loan in India:
Maintain a good credit score
One of the main aspects that your chosen lender will consider is if you have a good credit score or not. An individual’s credit score determines his/her creditworthiness in several ways. Lenders appreciate a credit score of 750 or above. That’s not all; maintaining a good credit score might also convince the lender to offer the borrower a low home loan interest rate. Hence, it is crucial to know how the credit score can determine your home loan EMIs.
Most lenders and financial institutions offer this facility, where borrowers can get pre-qualified for a housing loan in India. Benefits of a pre-qualified home loan include speeding up the entire application and verification process. However, to get pre-qualified, borrowers need to submit their financial documentation in advance, which includes bank and property documents.
Make a big down payment
The lender or financial institution determines the amount of downpayment borrowers can make. Saving up and making a big down payment can benefit the borrower in many ways. For instance, a big down payment leads to lesser EMIs and lower interest costs. By making a big down payment, borrowers can experience a lesser financial burden in the long run.
Know all about interest rates
An interest rate plays an important role in determining the overall cost of the home loan. There are certain factors that can help decrease your home loan interest rates. For instance, a good credit score, the borrower’s age and financial status influence it. Furthermore, borrowers can choose between floating or fixed interest rates.
Offer complete documentation
Lenders demand borrowers to submit certain documents during the housing loan application process. Offering exact paperwork as demanded can convince the lender that you are a reliable borrower and help speed up the entire loan application process. Some basic documents include ID & address proof, IT returns and bank statements.
Choose the loan type
Home loan has multiple variations that applicants must consider being fully aware of before choosing the right one. Borrowers can choose between fixed interest rate home loan and floating interest home loan. Borrowers’ should consult with their lender appropriately before choosing either of the loan types and understand the benefits available under these loans.
Borrowers should compare offerings across lenders/ financial institutions and choose the one that suits their interests the best. Few of the main things to consider include offered interest rate, loan tenor, applicable fees and charges against prepayments, down payment limit and relevant other factors.
Use a housing loan interest calculator
Taking a home loan is a long-term financial commitment. Thus, borrowers seeking a home loan should prepare their finances beforehand, and the best way to do it is by using a housing loan EMI calculator. Another advantage of using this calculator is, that borrowers can compare offerings across lenders and choose a lender that best suits their financial status.
Guide to using a housing loan eligibility calculator
Potential borrowers can use a home loan calculator by following these three steps:
Step 1: Go to the home loan calculator on your lenders’ website.
Step 2: Enter the loan amount, tenor, and interest rate, against which you want the loan.
Step 3: Click on the submit button and get accurate results.
By using a home loan interest calculator, borrowers will get a clear estimation of their required monthly instalments, total interest payable, and the principal amount.
Benefits of using a home loan EMI calculator
Borrowers can experience these benefits by using this online tool:
Fast and accurate
This online tool operates on algorithms and hence offers speedy and accurate results at all times, unlike manual calculations.
Free and unlimited
Almost every lender has a housing loan EMI calculator on their website. Individuals can use this tool unlimited times without the fear of paying any fees.
Furthermore, using a home loan EMI calculator, borrowers can finalise their home loan amount and plan for timely payments. Apart from this, multiple lenders pre-approve such loan products, simplifying and accelerating the loan application process. Borrowers can check their pre-approved loan offers by entering their name and contact information.
In a nutshell, when choosing a home loan, it is necessary to be aware of all its associated aspects. Borrowers should clearly understand their financial status and estimate their budget appropriately before applying for a housing loan. Additionally, applicants should also consider the benefits offered by different lenders and their loan sanction process.