If you are taking your first time taking out a home loan you may have a lot of thoughts on your mind. And there are numerous chances that you’ll miss these aspects. We’ve done the heavy lifting, and listed the main points you should consider prior to making a decision to take out the mortgage.
1. Obtain Your Credit Report
It’s been made easy because RBI have made it obligatory for credit bureaus to give their customers one free credit report each year. Therefore, you should get your credit report, and then check your credit score. A credit score of 750 or more is considered to be a great credit score. The reason to checking your credit score first before you do other things is that your score acts as an account statement on how healthy your credit score is, i.e. the frequency with which you’ve had to repayment of your loans in the past.
2. Meeting Eligibility Criteria
Each bank has its own eligibility requirements that have to be satisfied by the applicant before they allow any icici bank home loan. Mortgage loans are large amounts and banks and NBFCs tend to be more strict and conduct due diligence before accepting any loan. The general guidelines for eligibility are
Age: Anyone who may be a borrower must be over 21 years old, and less than 60 years old in order to make sure that the loan will end when they are retired. Therefore, the duration of the loan will be determined by the age that you are eligible for to get a loan.
Salary: It’s dependent on your income which banks decide the amount of loans a person has the right to. They’ll take into account the ratio of income to loan to ensure that the borrower earns 50% – 60% of their monthly income after having paid EMI to cover his or her daily expenses.
The company that you work for: Banks and NBFCs have the following list of companies they believe are trustworthy businesses whose workers will be guaranteed an assured and secure job. The list exists to protect the lender.
Documents Banks and NBFCs will examine the documents you submit to banks for approval, whether it’s your personal information or documents that you use for your home. Any slight mistake or error could lead the bank to refuse your application for a loan. Therefore, make sure you ensure that the documents the lender requests are correct.
3. Pay down in advance
The second thing you should be preparing is the down amount. You’ll begin searching for properties after you’ve finalized your budget, based on which you’ll decide on the best location. The main reason for this deposit isn’t just to ensure that the seller isn’t looking for buyers, but to protect the interest of the seller and ensure that the buyer isn’t able to rescind the deal.
So the down payment may be a bit higher due to the fact that the cost of the real estate market is very high. Therefore, you should be prepared to pay the down payment in order to make sure you don’t lose out on the house you’ve always wanted.
4. Fixed or Floating? Interest Rate dilemma
The next step is to select the type of interest rate. There are two kinds of interest rates, namely fixed and floating. with fixed rates, you pay the identical EMI throughout the term of the loan. The rate will not change in any way throughout the entire duration of the loan period. In contrast, the variable rate is the place where the EMI will vary according to the market and economy changes. It is a good thing that your EMI reduces as you decrease the interest, however when the interest rate rises, you’ll have spend more.
The purchase of a house at first is an incredible achievement , but also a terrifying one due to the large amount of money involved. Take these tips in mind to make sure you get through the process of buying your house without a hitch.