A proper financial plan is essential to ensure prudent funds management, a precise evaluation of income and expenses, and budget setting. It significantly helps while taking different loans from financial institutions. Having your house is a dream for many. To fulfil this dream, you can opt for home loans. Such loans refer to an amount of money taken from a lender or financial institution to purchase a new house, renovate an existing one, or construct a house on land you already own. Such loans have pre-determined interest rates and are payable in fixed periods. Now, with the help of the home loan EMI calculator, you can quickly determine the number of payments you need to make at regular intervals by entering the loan amount, the rate of interest, and the repayment tenure. So, let’s get you started on the factors which a potential borrower must check while applying for such loans.
- Credit Score
A credit score is a reflection of your financial well-being and status. This is why all financial institutions always check your credit score before lending you such loans. Your creditworthiness and degree of financial responsibility depends on the credit report prepared by many organisations. An organisation such as Credit Rating Information Services of India Limited (CRISIL), Credit Analysis and Research (CARE) Limited and Credit Information Bureau (India) Limited determine an individual’s credit score. An ideal CIBIL credit score for taking such loans is 700-800. If the score is below 700, there are higher chances of lenders rejecting your loan application. To ensure a good credit score, you must always make timely repayments of all your debts.
- Relationship with Lender
The older the relationship is with the lender or the financial institutions, the higher is the chances of the approval of the loan amount. This is because all lenders have proper knowledge about their customer’s financial past. The lender will know whether an old customer can pay back the loan amount along with the home loan interest rates on time. An individual with a strong repayment history will be given preference over a new applicant. The borrower must always check the authenticity of the lender before entering any discussion with them and ensure that the lender is licensed by the RBI.
Age is another factor that all financial institutions check before giving such loans. Financially stable people are preferred over others. People in the age bracket of 30-35 years are preferred since they are young, and are far away from the age of retirement. .
- Repayment Tenure
The period over which you will pay the total loan amount in equated instalments is referred to as the ‘repayment tenure’. The lesser the duration of repayment, the more is the willingness of the financial institution to lend you a loan. It’s easier to get loan approval for loans with shorter repayment tenures. Borrowers must also keep in mind the interest rates, and the initial loan amount also plays a significant role in determining the repayment tenure.
- Purpose of Loan
The purpose for which an individual takes the loan is also important to check before taking a loan. The loans taken for ready-to-move-in houses are considered safer than those for under-construction properties. It is because the builder delays the possession, or approvals may arise. It is essential to check the objective for applying for the loan and then avail of it.
There are many financial institutions offering home loans. Such financial institutions may reject home loans due to factors such as the reputation of the builder, low credit scores, or the borrower’s age. Loan applications may also be rejected based on the borrower’s poor repayment history or previous loan defaults. . Before applying for such loans, it is crucial to keep the above-listed factors in mind. Many financial institutions are providing these loans. By carefully choosing a suitable lender, you can access these loans at attractive interest rates that provide the best customer experience. Not only that, the whole process of availing these loans is now made online, and borrowers can get instant disbursement of loan amount after filing up the application form. Make sure to check your details and be truthful with your application.
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