Applying for a home loan requires you to meet certain basic criteria common across all lenders. You are required to hold a CIBIL score of 750 and above and along with a stable financial history. Also, you should cater to the required age bracket and reside in any of the cities where your lender would operate.
However, while you avail a housing loan, there are certain mistakes that you should avoid to ensure a smooth application and fast disbursal process.
- Deciding on the loan amount first
You must finalise your property before choosing your lender. Knowing the cost of your property will help you decide on the loan amount. Also, miscalculating the market value of your property, being aware of the down payment, etc. are some of the common mistakes to avoid when choosing a property. After you know the value of your property, you can decide on the loan amount. Several lenders offer loans for both under construction and ready-to-move-in house. Hence, before you choose your lender, consider deciding on the type of property you want to purchase.
- Applying for a higher loan amount
Consider analysing your monthly income before availing advances. Evaluate your debt-to-income ratio before availing a loan. Some lenders refrain from sanctioning loans for individuals having a debt-to-income ratio more than 30% to 40%.
- Defaulting on payments
Refrain from defaulting on a payment as it will affect your CIBIL score. In case your loan ends up being expensive, you can follow specific ways to reduce your home loan tenure and EMI such as prepaying your outstanding due, a balance transfer, etc.
You can use a loan EMI calculator to estimate your monthly payments in advance and plan your finances and repayments.
- Settling for the first deal
Do make sure to evaluate different lenders to avail the lowest home loan interest rates and to make your EMIs affordable. Also, while you choose your lender, do make sure that you can adhere to their terms and conditions.
Several financial companies offer home loans at attractive rates of interest and against relaxed eligibility criteria. Bajaj Finserv is one such NBFC that provides Home Loan at affordable interest rates as well as beneficial loan terms and features such as online account access, easy EMI options, prepayment and foreclosure charges, balance transfer facility, top-up loan, prolonged tenure, substantial loan amount, etc.
- Not knowing the types of interest rates
Advances like home loan offers two types of interest rates – fixed interest rates and floating interest rates. Fixed interest rates remain the same throughout the loan tenure irrespective of any changes. Floating interest rates vary as per revisions to the MCLR.
Choosing the right type of interest rates will depend on your risk appetite and knowledge on the volatile market. Thus, it is essential for you to check the current MCLR before selecting the type of interest rate suitable for you.
- Opting for shorter tenure
Refrain from availing advances such as a home loan with a shorter tenure, as it will make your EMIs expensive. Thus, you should opt for a longer tenure to have affordable EMIs. However, note the cost of loan with longer tenure will be higher compared to the cost of loan with a shorter tenure.
In addition, you should also be aware of the application process. Various lenders offer you home loan online application facility. To make use of the online application process, you will have to fill out an application form with the required details. After your application is approved, a representative of your lender will assist you through the process. Also, after you cater to all the formalities of your lender, your loan amount will be transferred to your account directly.