A home loan is a huge financial responsibility. It is a commitment that easily lasts a few decades and influences the way a person lives. Therefore, anyone planning to avail themselves of housing finance must choose to do so after thorough financial planning.
Borrowers must only borrow what they know they will be able to comfortably repay, even if they are forced to experience a period of financial difficulty. In this article, we discuss some simple tips that will help you choose the right home loan for you.
Choosing the Right Home Loan: Here’s What Borrowers Must Keep in Mind
1.Always Use a Home Loan EMI Calculator: A home loan EMI calculator is an online tool that home loan borrowers can use to calculate their home loan EMIs for different combinations of loan tenor and value. A home loan EMI calculator will help you figure out the most ideal combination of loan value and loan tenor for you, helping you keep your home loan EMIs affordable.
You can also use this calculator to compare offers from different lenders and choose the best one for you. The home loan EMI calculator also helps with budgeting, repayment planning, prepayments, and foreclosure. Therefore, all borrowers must make the home loan EMI calculator a part of their home loan planning.
2. Secure a Low Interest Rate: If you are planning to avail yourself of a home loan, you must make sure you are making every effort to secure yourself the lowest home loan interest rate you get. Interest rate affects the EMIs that you pay, the total interest you will pay on your loan, and the total cost of borrowing the loan.
Low interest rates enhance the affordability of the loan making it easier to repay. To secure yourself the lowest interest rates, apply for a loan with an excellent credit score, a low debt-to-income ratio, a stable income and a job.
Doing these things will help you quell any doubts your lender may have regarding your repayment capacity and encourage them to extend you a loan on the most beneficial loan terms and conditions.
3. Check Home Loan Eligibility: Home loans are a big financial commitment and therefore, it is not surprising that lenders are very careful about who they lend money to. To minimize the chances of a loan default, lenders create a set of eligibility requirements that any home loan applicant must meet to be considered eligible for a home loan.
When you meet all of a lender’s eligibility requirements, the lender’s willingness to sanction you a loan and also negotiate the terms and conditions of your loan increases. Therefore, loan applicants must always check home loan eligibility and apply for a loan only if they are eligible. Loan applicants can also use the home loan eligibility calculator to figure out the exact home loan amount that they are eligible for.
They can then apply for this same amount to enhance their chances of loan approval as well as secure the most beneficial loan terms and conditions.
4. Research Lenders and Try and Get Pre-Approved: There is no dearth of lenders in the market these days. This makes it even more important that loan applicants do their research and talk to at least a few different lenders. This will help the loan applicant get a clear picture of what they are eligible for and what they can negotiate for. Loan applicants should also try and get pre-approved.
When you are pre-approved for a loan, lenders are quite keen on having you on board as a client, even if it means extending to you loan terms and conditions that work more in your favour than theirs. So, always do your research and try and get pre-approved for a loan.
5. Maintain a High Credit Score: Your credit score is one of the most important and accurate markers of your creditworthiness. Individuals with excellent credit scores are people who lenders can trust to repay the loan without defaulting.
To be considered eligible for the lowest home loan interest rates and secure an affordable home loan, borrowers must maintain a CIBIL score above 750. If your CIBIL score is below 750, it’s best to improve your score and then apply for a loan.
These are some simple things you can do to make yourself eligible for the best home loan you can get and avail of this loan.
