Funding to build your own home is one of the best feelings. It is also one of the most stressful jobs. This is because it is a once in a lifetime event which remains with you forever. It requires enormous planning and can be extremely draining, both financially and emotionally.
The home finance field has been in the fast lane and booming. Investing in the home requires a huge amount of liquidity. This is something that not all will have in hand. In such cases, exploring various loan options is one of the prudent solutions. Lenders offering home loans include HDFC Home Loan, Axis Bank, SBI, and Bank of India etc.
Also, there are many digital lenders which can be of huge assistance when you have any financial requirement for purchasing a home. With their beneficial and lucrative home loan offerings like easy monthly instalments, higher repayment tenures etc., you can make the most out of home loans. However, before you apply for a home loan, you must take care of a few of the crucial factors which can assist you in making a better decision. These crucial factors that you must consider before availing home loan include –
Check for other loan alternatives – There are many financial institutions that offer home loans. So, ensure to compare a few crucial parameters before zeroing on the final lender. These parameters include home loan rate, interest rate type (floating or fixed), repayment loan tenure and EMI. With these parameters, you may get to select the prudent option as per your requirements.
Check for PMAY scheme eligibility – Pradhan Mantri Awas Yojana scheme was an initiative introduced initially in 2015 by the Indian Government to provide affordable homes. This is a CLSS (credit linked subsidy scheme), and beneficiaries as per this scheme can avail of interest subsidy provided they fall in the Indian Government listed norms. To make the most of this interest subsidy, ensure to first evaluate your eligibility for it, and if you are eligible, then you must look for the right lender. The lender, in this case, must be registered under the CLSS program to provide you with all the benefits.
Evaluate your score – Credit score is nothing but one of the major factors considered by the lenders when granting you any credit option, may it be a home loan or any other credit facility. In case you are looking to avail a home loan, then your score is one of the crucial factors that determine the rate of interest for a home loan. To maintain a strong credit score, you require to repay your existing loan dues and credit card bills on time in full, maintain a credit utilization ratio (CUR) of below 30 percent, maintain a balanced mix between secured and unsecured credit options, evaluate your co-borrowed or co-signed loan accounts for timely and full repayments and check your credit report periodically for any error. And in the case of any error or discrepancy, ensure to report them straight to the concerned credit bureau or lender for instant rectification. Such rectifications can automatically boost your credit score.
Rate of interest – The interest rate for a home loan is a major parameter that determines your EMI figure. While placing an application for a home loan with any lender, may it be an HDFC home loan or SBI, you must compare their rates. Your monthly income and credit score are the major parameters that usually determine your rate of interest. You must even be aware of the fact that there are two kinds of rates of interest – fixed and floating.
Special home loan offers – To help you in the journey towards attaining a dream home, many lenders provide you with various deals and offers. Such offers may be extremely beneficial and lucrative while taking home loans. Offers on processing charges and various other fees are a few of the necessary things which can assist you in lowering your total borrowing cost.
Top up option – Most HFCs (housing finance companies) offer extremely lucrative and appealing top up facilities. When you choose your lender, ensure to check up for schemes that are available to top up on a home loan once the loan is approved. Top up is an add-on loan amount that you can get against your prevailing home loan. One of the crucial benefits of the top up home loan option is that the procedure is quick, hassle-free and requires minimal documents. Top up on your loan brings you funds at extremely better rates than unsecured loan options like business loans or personal loans. You can get top up facilities for any of your crucial requirements like wedding expenses, home renovation, business expansion and financing your child’s education.
Down payment – Usually, when you take a home loan, you need to pay a part of the overall home loan, which is called a down payment. It ideally ranges anywhere between 20 – 30 percent of the loan amount. The remaining cost must be converted into a home loan in the form of EMI. If you hold any additional savings, you can enhance your down payment and get a loan just for the shortfall proceeds.
A home loan is way better than a personal loan. While you can purchase your home by availing of a personal loan too, achieving your financial goal via a personal loan can be extremely costly. Personal loans come with a higher rate of interest because it is a generic loan option and can be used to address different fields like business, medical, housing expenses etc. The processing charges and various other additional fees attached with personal loans also are extremely on the higher side. Thus, always remember that finding a home is a big-ticket cash commitment that may go on for years; thus, for this purpose, you ensure to choose a pocket-friendly loan like a home loan.
Availing a home loan even provides you waivers and tax benefits. Also, the best part is that you can shift into your dream home instantly after your loan is approved and you begin repaying your EMI in full. However, you should consider the above-mentioned points for a better decision. Note that if you have placed an application for a home loan with any lender, say HDFC home loan, then you can easily check the HDFC home loan status through the online channel. For checking the HDFC Home Loan Status or status of any other home loan lender, now you do not require to visit the branch physically.