Key tips to consider before getting a home loan

Our personalities are imprinted in our homes. It is a heritage that is transmitted from generation to generation. Therefore, a home is one of the most essential investments a person can make. But they are undeniably expensive, and they are rarely acquired all at once. Therefore, having easy access to credit becomes essential in the home buying process.

Here are six suggestions to follow to ensure a smooth home loan approval:

Credit where credit is due

In the age-old saga of human finance and access to credit, the latter has often taken precedence over the former in the game of hourglasses. It is very important to understand that you should never be presumptuous in your credit applications. Maintaining a good credit score and being aware of it is always very important. If you follow this very basic golden rule, the consent for your loan will be sanctioned without any problem.

There is no right time, but there is always a right merchant and the right property

Waiting for the right moment in relation to the dynamics of market statistics can be a mistake. It should be remembered that real estate prices do not fluctuate easily. Trying to speed up this process by rushing every time prices drop a little can be a costly mistake in the long run. The best advice in this regard is to assess your financial situation and find the right merchant for your needs. Some pioneering fintech brands are fully dedicated to accelerating home ownership in the affordable segment in India by offering easy-to-access and cost-effective home loans.

One of the major segments of buying a home is finding a property approved by general banking standards. The property you are looking to buy must be approved by the development authority of the city where you reside. After the appraisal, the next step is to verify the title flow of the property, for which a title search certificate is a necessity.

Commit to the transaction with the right interest rate and with your own contribution to the purchase

A home loan seeker must choose the right interest rate for repayment. Fixed and floating rates can have their pros and cons. If you have a calm behavior and do not want to indulge in the adventures of the market, you should opt for a fixed rate mortgage when the rates are comparatively lower. If you’re ready to trust the market and its ever-changing metrics, go for the variable rate because over the long term, the interest rate balances out the peaks and troughs of the market.

Each property buyer must provide their own Contribution Receipts (OCR) issued by the builder or seller. It is the margin of the money paid by the buyer out of his own pocket. It is usually 20-30% of the total property value.

Repay deferred contributions and verify eligibility

Your Credit Information Bureau (India) Limited (CIBIL) score, loan approval and settlement of your existing debts form an equilateral triangle; they are all equal factors in the home buying process. A higher credit score before applying for a home loan can mean the difference between getting it sanctioned or rejected. It is also very important to check your eligibility for a home loan beforehand after choosing the right property and the right lender.

Joint loans can be an advantage

A borrower can apply for a loan with a co-applicant to increase their EMI repayment capacity. Lenders view a shared home loan as a low-risk investment and therefore approve it on favorable terms.

Keep documents ready

It’s always handy to have your documents and checklists ready ahead of time for a smooth process. An employee must be able to produce bank statements for the last 6 months, the last Form 16 and payslips. Whereas a self-employed would be required to show bank statements for the last 12 months, an ITR for the last 2 years and business proof.

The author, Milind Gowardhan, is MD and CEO of LEAF Fintech. Opinions expressed are personal

(Edited by : Anshul)

First post: STI