Since purchasing a home solely with savings can be financially challenging for many, homebuyers often look for financing options. Like other major financial commitments, one should do due diligence before applying for a home loan.
Among many other factors, one should always look for lenders with the lowest home loan interest rate in India. With the availability of various lenders offering loans at different home loan rates in India, it becomes challenging to choose the one that best suits the borrower’s requirements. Here is a checklist of some basic points that borrowers must consider while applying for a housing loan in India.
Checklist to consider before choosing a housing loan
This checklist will help home loan applicants in making an informed decision regarding their commitment to any lender for a home loan.
- Check the lender’s rate of interest
Most financial institutions offer either fixed or floating home loan interest rates. If the interest rate remains fixed, then during the entire loan tenor it will not change and will remain the same. However, in the case of floating interest rates, the interest rate might fluctuate during the repayment tenor.
Applicants can choose to opt for any of the two types of interest rates based on their preferences and financial obligations. Individuals before applying for home loan, might also check the interest rates offered by their lenders using the home loan interest rate calculator.
- Evaluate the LTV ratio
The LTV or Loan to Value ratio depends upon the total cost of the home for which the loan is sanctioned. No financial institution provides 100% finance for the home. So, the applicants need to evaluate this ratio before applying for the loan, as it will help in determining the down payment amount needed for availing of the loan.
- Check the eligibility for a home loan
There are specified eligibility criteria that the borrowers need to fulfil to be eligible for a home loan. So, before applying, the applicants need to check the eligibility criteria for home loan. It includes the applicant’s occupation, age, existing debts, monthly income, and credit scores. The credit score is a significant parameter that matters when one is applying for a home loan.
If the credit score of an applicant is 750 or above, which is considered good, the lender easily sanctions the loan. Notably, the home loan eligibility for salaried individuals is different from that of self-employed applicants. One can check the home loan eligibility online with a calculator.
- Check the documents required for verification
Before application, the borrower must check the list of documents required by the lender for home loan to verify one’s income, identity, and eligibility. In addition to this, borrowers should also be ready to furnish any additional documents that the lender might ask for. If the borrowers keep all these documents handy, then it will be easier for the lender to process the loan.
- Calculate the home loan EMI beforehand
The borrowers can check their payable EMI beforehand using the loan EMI calculators and ascertain whether the EMIs are affordable or not. In this way, they can get an estimate of the EMI and the total interest payable and choose the most affordable home loan, depending upon their financial obligation and budget.
- Know the associated home loan charges
Apart from checking for the lowest home loan interest rate, the applicants must also keep a check on the various types of charges associated with the home loan. There are other charges associated with the home loan, like processing fees, foreclosure charges etc.
So, always try to pick up a home loan with low additional charges.
- Compare the housing loan rates and apply
Finally, before picking up any home loan lender, one has to always compare the loan options, their interest rates, and other applicable charges. Multiple lenders offer multiple loan options with varied loan interest rates. So, it is always better to compare the loan options beforehand offered by different lenders and then choose the best deal.
Many reputed financial institutions provide pre-approved offers on various financial products like loans against property and others. These offers help to streamline the overall loan application process. Borrowers can check their pre-approved offers from their lenders by entering their names and contact details.
So, borrowers need to follow these factors to find a home loan from a lender at affordable loan terms.