A home is a wonderful investment. And purchasing a home is one of the biggest decisions owing to the attachment of a big-ticket amount. However, in case you are a first-time homebuyer, you will, of course, have various concerns and doubts like will you be able to afford the home, will you be able to manage the home purchase etc.
But with quick access and easy availability of home loans nowadays, it is smoother and easier than in previous times to purchase a home. All it takes is being thoroughly sure of what such requirements are and in-depth knowledge regarding the technical aspects linked with a home loan. An excellent credit score of 750 and above, clean credit history clubbed with a stable employment history make you eligible to avail a good home loan deal.
Are you looking for your first home purchase? Listed here are some tips that will make sure a smooth buying process.
Pick the location
One of the initial things you must factor in before selecting a property and availing of a home loan is the property location. Ensure that the home you are looking to buy is situated in a safe place. Basic amenities like water, access to hospitals, supermarkets etc., must be within your reach. And one of the most crucial things is that commuting to the place where you work must not be stressful. However, if you do not mind spending additional money and time on daily travel, you can opt for a faraway location.
Review your credit score
Before you lend big-ticket loans like home loans, lenders factor in your credit score. It is one of the initial and important parameters that any home lender considers when checking your home loan application. A credit score of 750 and above is generally preferred by the lenders. Additionally, having a strong credit score, i.e., 750 and above, means you may get the home loan at a lower rate of interest and processing fee too.
Is credit score not thoroughly good enough? It is not a problem! It is very simple to give your score a boost. Just pay your outstanding credit card dues and loan EMIs by the due date and in full every month, do not max out your credit limit on your credit card, maintain a balance between your secured and unsecured loans, constantly monitor your co-borrowed accounts to check the repayments are on time etc. Maintaining a clean repayment record enhances your score and thus, enhances your chances of availing an approval on your home loan application.
Avoid settling for the first lender that you apply to or who provides you with a home loan. In place, look around, compare between various lenders, and finalize the one that provides you with the Best Home Loan Interest Rates and features. You can take the assistance of online financial markets to check your loan eligibility and compare between various lenders that best match your loan needs.
Ensure you can afford it
When you begin applying for a home loan, you will find that you might be eligible for higher loan proceeds than you need. But that does not mean you avail it and buy the most expensive home out there. Before opting for a loan, proceed, and ensure that you can afford the loan, i.e., you can repay the monthly repayments without requiring you to struggle financially. Do not forget that you will require making down payments even.
If you are not sure about your financial appetite, you can take the assistance of the LIC Home Loan EMI Calculator or Kotak home loan EMI calculator to understand the impact of availing the home loan on your monthly finances accordingly plan. Using the home loan EMI calculator, you can compute your EMI and tenure as per your repayment capacity. Note that the home loan EMI calculator is a simple online instrument as it asks for 3 basic details, namely required loan amount, offered interest rate, and preferred repayment tenure. Once you fill up these 3 details, you are presented with the result in the form of EMI and overall interest outgo. If you are satisfied with the EMI computation, you can go ahead with it. In case you are not, you can consider making changes to any of the three parameters to derive a satisfactory result.
Rate of interest dilemma
With home loans, lenders generally offer a floating or fixed interest rate. Wondering what exactly the difference is? Well, with the fixed rate of interest, your home loan EMIs stay fixed for the whole repayment tenure of the loan. Additionally, it is even a secured loan. However, there are extremely low chances of any additional savings over the long term as the interest rate is fixed in nature.
With the floating interest rate, your home loan EMIs are prone to change based on fluctuations in the market that impact your rate of interest. Although it is extremely less secure than a fixed interest rate, there are chances of additional savings over the long term as fluctuations in the market can make the rate of interest fall, which results in lesser home loan EMI. For this, take the current example. Since the COVID 19 lockdown, the interest rate for home loans and other loans has been all-time low. Now is the perfect time to make the most out of the low-interest rate scenario. Do you understand the drift here?
There is certainly no time to purchase the home.
Yes! Just go for the deal. With prices of real estate and home loan interest rates, you can anticipate fewer fluctuations. Thus, if you have figured out your dream home and have got the offer of an affordable home loan interest rate, then you must go with it and make the purchase. Note that there is no such thing called the right time.
Found your dream house already? Well, ensure to use the LIC home loan EMI calculator or Kotak Home Loan EMI Calculator to know your EMI beforehand as per your repayment capacity. This will help you better plan out your finances. So, get going!