With the interest rates of home loans at their all-time low, it is an excellent time to get them for yourself. If you have the repayment capacity and a good credit profile to your name, you may even get a loan against a land mortgage at the lowest rates.
But, deciding on taking a home loan is not so easy. You must think and keep note of specific details before you proceed.
● It would help if you remembered that the approval of a home loan depends on the eligibility criteria, which consists of CIBIL score, income, and your existing liabilities.
● It would be best if you also decided on the property's price that you are looking to purchase.
Also, home loans take time to repay, about 20 to 30 years. Paying EMIs over such a long period is quite exhausting. Similarly, there are many other things that you need to think about. Let's go through them one by one.
Know your budget
Having an idea of your budget is the most important step. It would be best if you analysed your financial condition and affordability to decide your budget. This helps keep your finances on track and ensures that you aren't in any future problem.
Remember the 35/50 rule.
Lenders generally ask about the liabilities and your financial commitments. These majorly include your existing loans. Banks generally lend about 45-50% of your monthly income. But, it is advisable not to let the EMIs exceed 35% of your income. This will prevent you from financial burden.
Check your credit score.
It is easier to qualify for home loans if you have a good credit score. In case your CIBIL is not good, you can wait for some time. You can borrow a small amount from a bank and pay the EMIs timely. This will improve your CIBIL. And an improvement in CIBIL score will indeed raise your eligibility for taking the loan.
Go for a shorter tenure.
Repaying a loan for a long time ensures a lower EMI. But, at the same time, you may end up paying a higher amount than you borrowed it for. Thus, the tenure you choose plays an important role in deciding the amount you will pay back to the bank. You must think before you opt for tenure and make a smart decision according to your conditions.
Do your calculations wisely.
Calculations are a must before you venture out and take any loan. Knowing your estimated EMI would help you analyze your affordability. It will also let you estimate the burden it might create on your finances and also whether it is according to your budget or not.
Conclusion
At a point where low-interest home loans are available, many people might be thinking of availing it for their dream home. But, before you finalize anything, you should definitely put in a bit of research. This would not only help you in deciding which loan to take but also in making the proceedings easier for you.
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