From filling the home loan application form to getting your loan sanctioned, you may face several challenges along the way. Read on to know about the critical things to consider before applying for a home loan to make the process hassle-free.
In India, owning a home is a significant personal milestone. For many, purchasing their first home reflects their financial independence, and it serves as a foundation for their future goals. Today, with the easy availability of home loan, buying a home insurance has become a lot easier than ever before. But, while many lenders are willing to offer you a home loan, intelligent financial planning is prudent.
Here are a few critical things you must consider while applying for a home loan:
Eligibility and documentation
One of the critical factors that you must take note of when you apply for a home loan online is the eligibility criteria of the specific lender. This dictate whether you qualify for a loan or not, and most lenders have a strict set of parameters that you must meet. Additionally, you must also inquire about the documentation process, as the lender may require you to submit certain documents before they sanction your loan application.
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Generally, the lenders would require you submit documents like proof of identity, proof of residence, income documents, property-related documents, tax-returns filed, etc. Make sure that gather the necessary documents well in advance to avoid delay in the approval process.
Interest rate and applicable fees
Before you initiate the home loan process, you must ask the lender about the various charges associated with processing loan and the rate of interest. These charges together must be considered to determine the exact cost of the loan. Often the lenders that lure customers with low-interest rate have high processing fees, documentation verification charges, etc., and eventually, the borrowers end up paying more than they expected. Hence, knowing these costs can help you save a significant amount in the long-run.
Loan tenure and the sanction amount
When you apply for a home loan, knowing the maximum amount that the lender can sanction (based on your eligibility), and the tenure is crucial information that can help you in the decision-making process. Choosing the right lender that offers the appropriate amount to suit your needs would ensure that you do not have to make any compromise.
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Besides, you must also consider the loan duration, as it has a direct impact on the monthly expenses; you must have sufficient time to repay the entire loan amount. Generally, most lenders sanction a home loan for 20-30 years. Assess your current and future financial condition and choose the tenure accordingly.
The home loan lenders in India do not sanction the entire cost of the property; they offer 80-90% of the property cost as loan. The remaining 10% to 20% must be paid by you, which is known as the down payment. So, knowing the down payment requirement beforehand can help you plan your finance better.
Additional home loan benefits offered by the lender like quick approval process or pre-approved properties, minimal documentation, step-up and step-down EMI facilities, can be beneficial to you. So, make sure that you keep an eye for these offerings before signing the loan documents.
So, now that you know about the critical things to consider before applying for a home loan keep these things in mind as it is vital to get the best home loan offer to suit your needs.