Finance

Tips To Consider When Applying For A Home Loan

The housing loan is, today, a financial offering that is easy to access. With digital lending protocols in place, you can even initiate an application online. Moreover, with the repo rate being low, you may want to avail a home loan quickly. However, since this is a high-value loan backed by your property, you shouldn’t be hasty when applying. 

By carefully tending to each element of your application, you can maximise your chances at approval and also give yourself a shot at securing favourable loan terms. To help you better prepare for a housing loan, here are 5 tips.

Ensure your CIBIL score is sufficient 

Due to its importance to lenders and its weightage in your profile, your CIBIL score is the first factor to optimise before you apply. Home loan lenders use it to gauge your creditworthiness and applying with a mediocre score could imply a rejection of your application. It is recommended that you apply when your CIBIL score is 750 or higher. Though a home loan is backed by high-value security, lenders would prefer you repaying the loan without default in contrast to them going through legal proceedings to recover lost dues. So, look up the home loan eligibility terms and verify that you have the CIBIL score required for the loan. 

Prepare to negotiate the housing loan interest rate

When you apply for a housing loan, you can negotiate with your lender, especially if you have a good financial profile. If you have a CIBIL score in the ideal range, that is 750 and above, you possess a certain amount of negotiating power. You can leverage your financial stability and strong credit history to secure a more favourable home loan interest rate. This tactic will not work if you have a history of defaults or don’t have a high CIBIL score as lenders will see you as a risk.  

Gather all the required documents beforehand

There can be delays in the processing of your home loan application if you do not have the required documents on hand. These are important as they support your eligibility. To know what you need, can consult your lender’s website. 

Here is an indicative list: 

  • ID proof: PAN card, voter’s ID, Passport
  • Proof of residence: Bank passbook, utility bills, ration card, passport
  • Proof of age: Passport, birth certificate, driver’s license
  • Property documents:
    • Tax receipts of land tax and possession certificate
    • Occupancy certificate
    • Registered sale deed
    • NOC from builder or society
    • Approved copy of the building plan
  • Income documents: 
    • Salaried
      • IT returns
      • Pay slips
      • Letter from employer
      • Form 16
    • Self-employed
      • Proof of business address
      • License of professional practice
      • Balance sheet
      • IT returns
      • Registration certificate of establishment 

 

Account for the down payment of the housing loan

The housing loan sanction typically covers between 75-90% of the total cost of the home. Whatever the remainder is, you are expected to cover it. Naturally, this can be quite a large sum and you should account for a 25% down payment to be on the safe side. In fact, making a large down payment, more than you need to, is financially beneficial. This reduces the cost of borrowing and lowers your EMIs too. 

Investigate the lender’s fees and charges 

Housing loans typically come with several fees and charges. These could be administrative fees, processing charges, secure fees, bounce charges, penal interest, and others. These can end up being quite a sizable amount and must be accounted for alongside the housing loan interest rate. Check for these when applying to ensure your home loan costs aren’t getting overly inflated. 

Borrowing via a housing loan involves a serious financial undertaking and these 5 tips will help you get approved and secure the best deal. Once you are ready to apply, consider loans like the Bajaj Housing Finance Limited Home Loan

This easy-to-access housing loan is one you can rely on to get your dream home on your terms. Here, you can get approved for a sanction of up to Rs.3.5 crore at a cost-effective and competitive housing loan interest rate. The flexible tenure that ranges up to 30 years allows you optimise loan repayment to your capabilities and keep your interest outgo minimal. Other loan features include the property search services through which you can avail expert counsel for key home purchase dealings and the legalities that come with it and investments. You can qualify for a PMAY subsidy with this loan and also benefit from quick loan processing. To get started, apply online and enjoy a hassle-free housing loan experience. So, I repeat The housing loan is, today, a financial offering that is easy to access. With digital lending protocols in place, you can even initiate an application online. Moreover, with the repo rate being low, you may want to avail of a home loan quickly. However, since this is a high-value loan backed by your property, you shouldn’t be hasty when applying. 

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