When you apply for a home loan, you must comply with various procedures, and along the way, you may face several challenges. Read on to know about the important factors you must know before applying for a home loan to get your loan sanctioned without any hassles.
In India, buying a home is a dream for many. Some consider it an important milestone in life. And, many lenders in India offer home loans at competitive interest rates. This has made getting the loan easier than ever before. But, while you may find lenders willing to provide the loan, you must be prudent with your finances and make an informed borrowing decision.
Before you apply for a home loan, you must take your time to understand the requirements, the procedures involved, etc. Equipping yourself with as much knowledge as possible will help you mitigate the challenges along the way.
Listed below are a few critical things you ought to know about home loans.
- Eligibility criteria and documents required
Different lenders have different eligibility requirements. Hence, when you apply for a home loan, you must compare the home loan offers from different lenders and check their eligibility criteria. This will help you find the right lender, and you will get a fair idea if you can get your loan application approved by a specific lender.
Additionally, you must consider the documentation requirements of the lender. The documentation generally varies based on your income profile, profession, and the amount you wish to borrow. Most lenders would require you to furbish important documents like identity proof, residence proof, business proof, property-related papers, income proof, etc.
It is advisable to gather the necessary documents before (as required by a specific lender) so that you don’t have to go through last minute hassles and avoid the risk of delay in the sanction process.
- Home loan interest rate and associated charges
The home loan interest rate and other charges are a critical aspect of home loan, as they directly impact affordability. Due to stiff competition among lenders, many financial organisations offer home loans at competitive interest rates. But, you mustn’t fall prey to the lenders’ marketing gimmicks that say, ‘get home loans at the lowest interest.’
Often, the lenders that offer low-interest rate home loans have many hidden charges like loan processing fees, property assessment charges, documents verification fees, etc. All these charges can contribute to a significant amount and increase the overall loan cost. Hence, it is vital to know about the interest and other charges so that you can compare and choose the right lender with the lowest charges.
- Loan duration
Most lenders in India offer home loans for a maximum duration of 30 years. You must check with the lender if they offer long-term loans and what is the maximum term. This will help you choose the right tenure so that you have sufficient time to repay the amount without compromising on your regular expenses. Remember, the loan duration you choose affects the EMI; the longer the term, the lesser the EMI. So, assess your financial condition and determine the loan duration wisely.
Apart from the interest rate and eligibility criteria, when you apply for a home loan, you must consider the benefits offered by the lender. This includes flexibility in repayment, quick approval process, minimal documentation, Pradhan Mantri Awas Yojana subsidy benefits, etc.