Owning a house is one of the biggest milestones one can achieve in life. However, buying a home is not only an achievement, but it is also a major life-changing decision as it can affect your finances for many years to come. If you can’t afford to buy a new house all by yourself, opting for a home loan is the best option for you. Getting a home loan makes it a lot easier to bear the expenses of a new house. It is like external financial aid offered by banks and lending institutions to eligible individuals who want to own a house. For some, it can be a symbol of success and independence. For others, it can be a way to secure their family’s future.
Home loans are offered considering the constantly increasing cost of land and property today. But to get a home loan approved isn’t that simple. You need to qualify certain eligibility parameters, along with strict paperwork and make timely EMI payments and other additional charges in the future. So, to get a clear idea about getting a home loan approved, here are a few things that you must know.
- Credit Score: To maintain a good credit score and to have a flawless credit history is very important if you want to get your home loan approved. Since the credit score is the first thing, a banking institution considers before approving any loan to its customers. Besides, you can maintain a good credit score simply by making timely payments of past debts, paying your credit card bills and avoiding pending dues. A credit score of 750 or above is regarded as decent; anyone with a lower score must take necessary actions to increase their score in order to get the amount sanctioned successfully.
- Interest Type: Every bank and lending institution provide home loans at a certain interest rate that can be determined using a home loan calculator. This rate is important as it helps in determining your EMIs. A home loan calculator is easy to use and helps you evaluate the interest amount that will be paid back to the bank in addition to the amount borrowed. So, it is advisable to compare financial institutions to get a home loan at the lowest interest rate. Plus, you must also decide the type of interest you want to be charged.
- Floating Interest Rates: these interest rates are subject to change with time, according to the alterations in the base rate determined by RBI and overall market condition.
- Fixed Interest Rates: Fixed rates, as the name suggests, remain the same throughout and are not affected by any external factor.
- Loan Tenure
A home loan is usually provided at long repayment tenures that can be extended up to 20 years. Moreover, it is a hefty amount that a borrower might take some time to repay. Thus, longer tenures ease the burden on monthly income and can be paid off without causing difficulty. At the same time, a shorter tenure lets you repay the borrowed amount in a shorter time, causing the EMI to be higher, but the rate of interest in this loan tenure is comparatively lower. Thus, enabling one to save on the overall borrowed amount.
To be able to apply for a home loan, you need to qualify certain eligibility criteria that are as follows:
- Income of The Applicant: Any salaried employee under a public or reputed private organisation with a stable monthly income can apply for a home loan. In the case of self-employment, any individual filing income tax return is eligible for a home loan.
- Age of The Applicant: The applicant must be at least 21 years of age to be eligible for a home loan.
- The number of dependents: The financial institution or the bank needs to know the number of people the borrower supports financially in order to approve the home loan.
- Assets and liabilities: A home loan can take the shape of a financial burden if the assets of the borrower do not outnumber their financial obligations and liabilities. Thus, you must have a good credit history and the ability to clear all past dues to get a home loan approved.
Apart from qualifying the eligibility parameters, make sure you carefully read through the documents required by the bank or financial institution you opt for. Moreover, every organisation needs different documents, but identity, birth, income, and address proofs are common documents required by almost every bank and financial institution. So, make sure you go for reputed banks like Axis Bank that offer home loans starting at Rs. 300,000.