5 crucial steps that need to be taken before applying for a housing loan.
A housing loan is among the best ways to finance the purchase of your dream home. You don’t need to save for years, bid farewell to a large portion of your savings or liquidate any of your assets! Just gather up enough to cover the down payment, apply for the loan & make the purchase. With a home loan, you’ll be walking through the doors of your home before you know it! However, these loans involve large sums of money and it’s critical that you take all the right steps leading up to the application process to ensure you make the correct borrowing decisions.
1. Get the best down payment possible.
A bigger down payment means smaller interest payments. How? Well, interest rates are calculated on the loan amount you borrow and the principal amount after every EMI payment. A higher down payment will reduce the amount upon which the interest rate is calculated and will greatly reduce the total interest payable.
2. Check your credit score & improve it.
Credit scores are vital for approvals and lower interest rates. So before you apply for your housing loan, make sure you check your credit score. Sometimes there could be errors that are bringing down your score, you need to go over the credit report and look for any such irregularities. If you find such issues, it’s essential you report them to the credit bureau and get them rectified. If your score is below 700, or even if it is above it, you should try working on your it before applying. A higher score is always better.
3. Take the help of calculators.
Step three is to use calculators. Begin with the eligibility calculator; it will give you a near accurate idea of the loan amount you should borrow. Any higher and you could be looking at a rejected application & wasted processing fee, not to mention a major disappointment. Then move onto the EMI calculator, it will tell you all the installments payable for your housing loan. This will give you the information you need to control your spends & create plans to cover the monthly payments.
4. Compare your options.
Before you opt for a housing loan, remember to compare the market thoroughly. Going ahead without a proper market analysis could mean that you miss out on a good deal simply because you didn’t bother to look for it. You should check the charges (especially the processing fees), the tenure & repayment plans on offer, the reviews, the interest rates, etc.
5. Fine print.
I love reading the fine print, said no one ever. But you still need to go through it, it will ensure you take the leap of a housing loan prepared & informed. This is vital to a successful journey out of debt. Moreover, it will ensure you do not have any unwanted surprises with the loan.
These 5 steps are extremely important and you should take them to ensure you have a smooth borrowing experience. Hope this has been helpful, good luck and all the best!