Points to be Noted Before Applying for a Home Loan

Owning a residence is a significant financial decision for any borrower. However, purchasing a home requires substantial credit, which a housing loan can cover conveniently.

In this regard, first-time buyers need to make an informed decision evaluating the interest rate and repayment capability. Apart from these factors, individuals need to check a few things before making the home loan application.

Few pointers to keep in mind before initiating a home loan application

1. Credit score plays a crucial role

Whether you are a first-time housing loan applicant or a borrower with credit-availing history, lenders check credit score for evaluation. This score ascertains an individual's repayment capability and consistency of paying the outstanding dues. Typically applicants with a 750+ CIBIL score have a higher chance of home loan approval and enjoying reduced home loan interest rate.

2. Evaluate the EMI obligation

Applying for a home loan also obligates borrowers to monthly instalment outgo. One would need to assess whether he/she can bear the resultant EMIs. Individuals can use a home loan EMI calculator in this regard for a precise result.

3. Tenor

Additionally, applicants should also check the home loan tenor. This would help them in calculating their repayment structure. Going for a short tenor reduces the interest burden and outstanding balance. However, it increases the EMI burden. Applicants must also check the part-prepayment policy and foreclosure charges of the selected lender.

4. Assessing the documentation

Before making a home loan application, individuals must check the document requirement mentioned by lenders. Keeping these papers handy streamlines the application process and makes it hassle-free.

Some of the required documents are –

• KYC documents- This includes passport, PAN card, Aadhaar card, driving license, etc.

• Income proof- It includes salary slip or Form 16 for salaried applicants and profit & loss statement and TR papers for self-employed.

• Business vintage of not less than five years.

• Bank statements for the previous six months.

Apart from the mentioned documents, different lenders may have additional requirements like passport-sized photographs, property papers, etc. Hence, before making a home loan application, potential borrowers must evaluate the mentioned factors for swift processing.