Purchasing a home is a very big decision and one which should not be taken lightly. It is a long-term commitment, and there are some different factors, which must be kept in mind, before applying for the same. Before making any formal commitment, you must be aware of the fact that you could spend the better half of the next decade repaying this loan.
Here are a few things to keep in mind before taking up a home loan or any kind of loan before you visit us:
1. Know the maximum eligibility amount
The amount you are eligible to receive is calculated based on the annual income and the credit history of the past. The bank must be sure that you will be in a position to repay the amount of the loan, including what is owed in the form of interest. Thus, they take the annual income into consideration.
This includes only the salary heads of your paycheck and not any other allowances included in the monthly income. For example, the medical and living allowances are not taken into consideration by the bank, and this is why your calculations may not match those done by the bank. If you have a dependable source of income and a good credit score banks could offer a loan of up to 80% of the total cost of the house.
2. Check the CIBIL Score
The credit worthiness of an individual plays a major role in determining the amount of the loan, as well as the rate of interest. CIBIL has come up with a system of calculating a person’s score in an easy and convenient manner. Based on the credit history like; timely payment of bills, cheque bounces, existing loans, timely repayment of loans, etc. the credit score is calculated.
These ranges form 300-900 a person with a high credit score, is more likely to receive a loan with a reasonable rate of interest. Thus, it is important always to take some steps to make sure that you score high in this department.
3. Loan Tenure
EMI is the amount which has to be paid towards the loan on monthly bases. The longer the tenure of the loan, smaller will be the amount to be paid in installments. An EMI calculator can be used to narrow in on this amount, so that you have an idea of how much will have to be set aside, to avoid defaults.
There are three types of EMI calculators you must select the one that is relevant to your offer, in this case, a home loan. Based on the rate of interest offered by the bank and the tenure over which you would like to repay the same, the EMI will be calculated.
Deciding the type of home loan you need to buy a home is often the biggest question. Often the questions whose answers can help in making this decision easier are how long does a person wishes to stay in the home, payment flexibilities, the risks and downfalls in interest rates and of course the budget
These are the three most basic things you must keep in mind before applying for a loan. It is important to go through the offer document and make sure that you understand the finer details, before agreeing to anything.