Living in your own home is one of the biggest dreams. Buying a property is probably the most expensive financial decision of your life. The increasing prices make it almost impossible to fund your purchase without a loan.
Most banks and Non-Banking Financial Companies (NBFCs) offer housing loans to meet the rising demand. First-time buyers may find the entire procedure to apply for a loan cumbersome and confusing. So, here are five tips to make your loan application procedure hassle-free and simple.
- Check your credit score
One of the first things lenders will consider while evaluating your loan application is your credit score. It includes your current and past debts, loans, and credit card history. The credit report not only considers your timely payments but also gives an insight into your current outstanding. The credit score is a three-digit number between 300 and 900 and reflects your creditability. A higher score increases the possibility of the lender approving your application. It is thus recommended that you check your score before submitting the application.
- Determine between fixed and floating rate
Both the options of a fixed and floating rate of interest have their pros and cons. It is not simple to determine the better option. Certain lenders may allow you to change the fixed rate at the end of a predetermined period. Alternatively, you may receive a lower floating rate at the start of the loan tenure. However, over the years, the rates may increase and you may have to pay a higher rate. It is recommended you use a home loan calculator to determine yourEquated Monthly Installment (EMI) and save yourself from an unexpected financial burden.
- Consider additional charges
Financial institutions levy some charges to approve your loan application. Some of these include processing fees, legal charges, late payment penalty, and prepayment fine (in certain instances). It is important you clarify all such charges and compare products offered by different lenders to make an informed decision.
- Keep all documents ready
When you submit the home loan application, you will need to attach certain documents along with the form. Property-related documents like development plan, sale deed, No Objection Certificate (NOC) from the developer, and title documents are mandatory. In case you are purchasing a resale property, you may require seller’s registration certificate, power of attorney, bank NOC in case the seller has an outstanding loan, and mutation certificate. It is recommended you keep all the necessary documents ready to avoid delays.
- Read the fine print
Often, you may avoid reading the entire loan document in details as it is a large one. However, it is vital that you read all the terms and conditions and the fine print to ensure you do not have any surprises later. It is important that you do not sign any blank papers and clarify all your doubts before making the decision.
Availing of a housing loan is not as complex as it appears. Taking time to understand the procedure and having all the necessary documents ready will ensure the approval is completed in a short period of time. Adhering to the aforementioned tips will help you move into your dream home faster.