Important Things to Consider Before Opting for Housing Loan in India

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Building your dream house is a beautiful effort on your part. But it is also a hectic process as it is a lifetime investment that demands no room for error. 

A home loan gives you a safer way to manage huge expenses that are to be incurred on building a house. However, you must consider few important things, like, home loan eligibility before applying for a loan.

Home Loan Eligibility Criteria

Before applying for a home loan, you must meet the eligibility criteria that all banks set beforehand. A housing loan eligibility criteria are decided on the following factors:

  • Monthly salary 
  • Expenses 
  • Work profile
  • Other side sources of income
  • The tenor of the loan repayment 
  • EMIs availed
  • Credit score (repayment history of loans and EMIs)
  • Age of the borrower

You must thoroughly check all these eligibility conditions before applying to avail of the best home loan options for you. If you strongly meet all the eligibility criteria, then you can avail of a lower home loan interest rate on your housing loan.

Your eligibility criteria get strengthened with lots of factors. To have a hassle-free loan borrowing process, remember these important tips before you take a home loan. 

1. Inspect your Credit Score

The credit score depicts your personal history of paying EMIs, credit cards, and other dues. This is the basis of your house loan eligibility. Therefore, if you have a history of paying your EMIs consistently, and have not had many dues in the past, then it can build up your reliability with the banks. Based on your credit score, banks can give you a home loan without much nuisance. 

Credit Score is prepared by a trusted authority, so, they provide it directly to the loan lending institution. If you have a satisfactory credit score, not only your home loan would get approved quickly, but you will also be provided with a negotiable home loan interest rate

2. Calculate your Budget and EMI Repayment Range

Needless to say, you must consider your budget before planning a house and applying for a home loan. Having a calculated budget gives few advantages like

  • You can decide the total loan amount that you need.
  • You can estimate the maximum amount of money you can bear as a down payment.

So, on average you can borrow up to 80% of the total amount of money that you will be spending on your house. You can recompense this amount by paying EMIs from your income. So, you’ve to pre-decide your range of EMI as well so that you can repay it on time without limiting your other expenses. If you think your EMI range is high and would get difficult to manage, it is advisable that you include your spouse or your parents as co-borrower of the home loan. 

3. Collect Documents to be Included

Banks ask for certain documents to verify your credentials. Therefore, make sure you collect all the needed documents, and ensure they are in proper order and specifications in which the bank requires them. We are listing some basic documents that will be needed with your home loan application.

  1. Form 16 (Income Tax Returns)- This form specifies whether you’ve paid your taxes or not. You can easily obtain this form if you have filed returns for the past 2-3 years. 
  2. PAN Card- Having a PAN Card is a prerequisite for the required documents for a home loan. Your PAN Card will be verified first by the lender to ensure its authenticity.
  3. Banks Statement- Loan Lending institutions always check your bank history before giving any kind of loan. So, having a bank statement for the past 6-12 months is also necessary for a home loan. A bank statement will reflect the income and expenses you’ve made. You must maintain a good balance in your bank account if you need a big home loan. 
  4. Aadhar (or UID) Card- Aadhar card is your Unique Identification Number as a citizen of India. You need to attach it with the other documents for the verification of your identity.

4. Choose Banks and Lenders 

Getting a desirable home loan becomes troublesome when there are so many loan lending institutions in the market. Therefore, choose a lender per your priorities and convenience.

You can apply to multiple lenders for your home loan, but make sure you do not apply to too many as multiple credit enquiries diminish your credit score. It is desirable to contact lenders who have pre-approved your property to reduce your loan approval time. 

You should apply to one or two lenders before you book the property for building the house.

So, considering all these points would work in your favour. If your home loan eligibility is in sound condition, getting a home loan would become a cakewalk. If you’ve co-borrowers, make sure their documents are also complete and sound.

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