The whole process of home loan comprises of lots of formalities, there are various ways in which this loan is unique as compared to other forms of borrowing. Firstly, the amount of home loan is much higher than other loans and secondly, considering the increasing property prices, it is an inevitable debt for the people belonging to the middle class. We all face some or the other issue while applying for a home loan. So, here are 7 helpful tips to get your home loan approved.
Assemble All The Necessary Documents
Documentation plays a pivotal role in the getting your home loan approved and property NOC is one of the most overlooked documents. While purchasing a property, this is one of the key documents which need to be provided.
Along with NOC, you also have to furnish the deeds of the house as per the directions of the bank. In the event if any type of discrepancy is found then you will have to start the process all over again i.e. you will have to submit all the documents once again. In order to avert this situation, make sure you have made all the inquiries related to the home loan before you apply and make sure you have provided all the documents as per the bank/lender request.
Get The Amount For Down Payment In Place
For all big-ticket purchases, down payments are a must. It is basically margin money you need to pay for the loan up-front. Generally, the bank only finance 80% of your home’s value, while the rest 20% you will have to pay a lump sum or a down payment. Let us assume your home costs Rs. 30 Lakhs, this means you will have to pay Rs. 6 Lakhs as down payment.
In the event, the valuation done by your bank does not match your valuation, then also you will have to pay the difference. Make sure you have evaluated your property privately, make enquiries at the bank and take all the reasonable steps before you apply for the loan. This way, you will be able to make out whether you will be able to make the down payment or you will have to look for another loan provider that fits your requirements.
Finalize Type Of Interest Rate
Loans are available with either fixed rate or floating rate. Fixed interest rates offer protection from market fluctuations and even the monthly EMI payments remain constant through the loan term. As for the flexible interest rate, you can make the most of the dips in the market and pay a much lower interest rate at that time. However, be wary as the opposite can also happen.
If you have decided to go with the floating interest rate, make sure you have asked your bank for the records of interest patterns in the past. In case, you are going with fixed interest rate, make sure you are aware of the fact that the bank has the right to revise the interest rates for the home loan periodically. Depending on the of interest changes in the past, a floating rate may prove beneficial to you in the long run.
Ensure You Meet The Criteria
In the event, your credit score is not good, not only your interest rate will soar, but your home loan application may also get rejected altogether. If your documents are improper, your income level is down or credit score is poor, there are chances that your application will be rejected in the first stage. This will make your credit score to plunge down, even more, making it difficult to acquire a home loan.
If you really want to avoid such a possibility, make sure you are well-versed with the norms of the bank before applying. There is a processing fee you need to pay and it is usually non-refundable. Every time your application is rejected, it affects your credit score making it more adverse. Therefore, make sure you have done your homework and acquired all the knowledge before you apply for the home loan. In case, you haven’t met the eligibility criteria for a particular loan provider, make sure you have taken your time to explore other providers and compare before making a final selection.
Apply For The Right Loan Amount
The amount your bank is interested in lending will depend on your need, credit history, and your financial capacity. In case you have a poor credit score, the bank will straightway deny to offer you the loan amount you wish to borrow. In addition, before your bank offers you the loan, they will get the house evaluated by their own representatives.
Providing A Guarantor
This is a move you should make only when you are in a situation where you think you will have to offer some form of security to the lender. The benefit you get to enjoy is that a secured loan is offered at a competitive interest rate as compared to an unsecured loan. There is no need to provide physical assets such as security, this way you get to secure a loan using your shares as security while continuing to earn yearly dividends from them.
Maintain Your Credit Score
There are different ways in which you can boost your eligibility for the home loan. Every bank and financial institution take the decision of approving your loan on the basis of your CIBIL score. Your CIBIL score lets your bank/financial entity know that you are good with your investments and you will be able to handle the loan easily.
To maintain a good CIBIL score for a home loan, it is important you have a clean financial record. It is important your credit card is not maxed out, you should not have any outstanding debt and most importantly, avoid too many enquiries for the home loan. Picking your lender is also one of the key aspects and apply only when you are sure of being approved.