Applying For a Home Loan? Key Points to Keep in Mind Before Choosing a Lender
3 min readIt is better to start early when it comes to possibly making the biggest investment of your life such as buying a house. The cost of owning a home varies based on all factors. For instance, a house in the outskirts will be up for sale at a lower rate compared to the one in the city with the same square footage. However, if you fall short on the financing you can get a housing loan. However, most of the time property dealers lure in prospective buyers with discounts, payment plans, and schemes. Numerous banks, and housing finance companies (HFCs), too, have special offers on home loans. Applying for a home loan is an easy and convenient process. If you are well-prepared with an error-free application form and meet the criteria to be eligible for a home loan, your loan will be processed very smoothly.
Factors To Consider When Choosing A Lender
- Eligibility & The Loan Amount Required
The loan amount you are eligible for will be based on factors like your employment, credit history and monthly income. For home loans, the value of the property is another factor that is taken into consideration while granting a home loan. The loan amount granted towards the home loan is 80 to 90 per cent of the property’s value.
- Documentation
To successfully apply for a home loan at any bank or housing finance companies you need to make sure you have all the basic documents required for a home loan. Documents such as income tax returns, form 16, salary slips, bank statements, etc need to be submitted along with the application form for verification.
- Interest Rate On Loan
The loan repayments and interest outflow depend upon the rate of interest on the home loan. Before you finalize the bank to take a loan, do your research and look for lenders that offer you a lower rate of interest on the loan.
- Processing Fee And Other Charges
The lending institution charges a certain processing fee to process your loan. The processing fee charged ranges anywhere between 0.25 percent-2 percent of the loan amount. Different lenders have a different set of terms and conditions pertaining to prepayment of the loan.
- Loan Approval And Disbursal
Usually, banks take around 5 days to sanction a home loan, however, the time frame may vary from one lender to another. There are a number of post-disbursement services involved. Make sure you choose a lender that provides you with faster loan approval and instant disbursal of funds.
Eligibility Criteria
For a smooth application process, you fit the basic home loan eligibility criteria. The criteria are as follows:
- To be eligible you must be a citizen residing in India.
- You need to have a work experience of at least 3 years.
- Individuals between the age of 23 and 70 are eligible for a home loan
- The applicant must have a CIBIL Score of over and above 650
Documents Required
Mentioned below are the documents required to apply for a housing loan
- Aadhaar Card/Passport/Driving License
- Address Proof
- Identity Proof
- Form 16 or your latest salary slip
- 3 months bank account statement
Home Loan EMI Calculator
When you apply for a home loan make sure to take the help of a home loan EMI calculator to make an informed decision in managing your finances. The EMI calculator is easily accessible and available online you can also find it on the bank or lending institutions website. With a home loan EMI calculator, you can get the estimated amount that needs to be paid towards your loan till the end of your home loan tenure. This way, you will be able to understand whether you can afford the monthly repayments and make your financial decisions accordingly. To be able to use the EMI calculator you just need to fill in the following details and get your results:
- Loan Amount: The desired loan amount that you wish to avail with the home loan
- Loan Tenure (In Years): The desired loan tenure to avail the housing loan.
- Interest Rate (% P.A.): The rate of interest applicable to the housing loan
