6 things to check before applying for a Home Loan

Before you apply for a home loan, here are some things you need to check, whether it is saving enough money for the down payment or figuring out your CIBIL score

You reap numerous financial and personal benefits from owning a property. The banking sector offers many home loan opportunities that are rewarding and convenient, whether you are looking to purchase property for investment purposes or to find a new home. You can use a home loan as financial assistance if you lack cash or don't want to liquidate your savings.

Sure, banks assist you in making the dream of owning a home a reality by offering easy monthly installments and flexible repayment terms. But there are a number of pre-requisites in the process upon which your home loan eligibility and repayment terms will depend. So, what are the 6 main things that you must check before applying for a home loan? Let’s have a look:

1. Have you researched your home loan options?

With easy access to information on the internet, do plenty of research on the various home loan options that are available in the market before applying. Comparing home loan interest rates, repayment tenure, foreclosure flexibility, charges, etc. across various lenders is paramount if you want to nail down the right home loan option for you. Remember, it is a long-term financial commitment. Hence, you must make sure you apply with the right lender that offers attractive terms and conditions.

Also, make sure you go over every detail and uncover every nitty-gritty before, during, and after your application. Before making up your mind, do check out various IDFC home loan reviews on our website or other reputed portals to get a fair idea of our affordable housing loan offers and excellent customer service.

2. Do you have enough savings for a down payment?

It is easy to fall into the trap of thinking that the lender will finance the entire amount of your property within the home loan, when in reality, it’s close to 70-90%. You have to bear the rest of the cost of your property as a down payment when you are applying for a home loan. Hence, it’s a good idea to consider your finances and whether you have enough corpus to make the down payment. Of course, such a payment should not come at the cost of eating up all your savings or putting you in a spot of financial bother.

3. Do you have any existing loans and EMIs?

A big factor of your home loan eligibility is whether you have any existing financial liabilities or not. Depending from lender to lender, there is only a certain percentage of your monthly income that you can afford to use for paying off EMIs. Hence, if you are already paying off regular EMIs, your ability to take up another home loan EMI might be affected. Thus, before applying for a home loan, it’s best to clear your existing EMIs to improve your eligibility. 

4. Can you afford the home loan EMI?

Affordability is a major contributing factor that you need to consider before applying for a home loan, which offers many options for you to choose from. Fixed monthly EMIs shouldn't only be affordable but should also be adjusted comfortably within your cost of living.

You should consider overhead costs on top of your monthly EMI and ensure that your income outflow is steady so that you can meet any unforeseen emergencies. As such, even though you can always buy the house of your dreams in the location of your choice, you also need to make sure that you can afford the mortgage. Tip: Use online home loan EMI calculators to determine the optimum EMI you can afford based on your repayment capacity.

5. What is your CIBIL score?

Maintaining one's credit score is an essential requirement for applying for a home loan in the banking sector. Whether you're making cyclical credit card payments or repaying a loan, regularity pays off. Having a CIBIL score over 750 will enable you to get even better interest rates on your home loan. Additionally, there is a significantly higher likelihood of faster processing and disbursement of the loan. Hence, before applying, check what your CIBIL Score is and whether you need to improve it.

6. Have your figured out your preferred repayment tenure?

Home loan EMIs are calculated based on the repayment tenure. This tenure is essentially the period you take to repay the sanctioned home loan. While going for a longer tenure might reduce your EMI amount, you will end up paying a very high interest component. On the other hand, shorter tenures result in higher EMIs but quicker repayment of loans. Hence, before applying, figure out whether you have a steady and increasing flow of income that will allow you to settle for shorter tenures, as that will also yield better interest rates for you.

Identifying the right home loan is not an easy task. At IDFC FIRST Bank, we know the nuances. Count on our teams to handle all your home loan requirements completely transparently and without stress. With IDFC FIRST Bank, you can get home loans with competitive interest rates and have your lifelong dream realised without the risk of putting a wrong foot forward.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.