A residence is the central point of necessity for any individual or family. Purchasing a home demands extensive financing; it is a long-term investment. Various reputed financial institutions strive to help prospective buyers realize their dream by providing home loans across multiple beneficial features. This is evident in the 13% increase in total loan value in April 2019 alone.
However, since lenders are entitled to pay a substantial portion of the purchase amount, thus they are extra cautious when it comes to evaluating the property.
Although home loans are secured credits where the property remains mortgaged, lenders consider multiple points of eligibility before approving an application. Borrowers can use the home loan eligibility calculator to calculate their loan eligibility accurately.
This calculator can be helpful for a borrower to gain an appropriate idea on the amount of credit they may be eligible for. However, there are certainly other points which he/she needs to consider to successfully apply for the right home deal.
Step 1: Check The LTV You Will Be Eligible For
Loan to Value or LTV is the percentage of the current property value sanctioned as the loan. A higher LTV means you will be avail a higher amount as your home loan. It also determines the number of funds you have to pay as a down payment.
Home loans involve a substantial expenditure and hence needs funding. This credit ensures the purchase of properties sans any stress on the personal budget of borrowers. Thus, it is crucial that one calculates the value of the property to purchase, evaluates the LTV (Loan to Value), and then chooses a lender offering it with attractive interest rates.
Tip 2: Choose Between Fixed And Floating Interest Rates
Interest rates play a crucial role while choosing a home loan suited to your requirements. It determines the net repayment amount that one needs to pay over the tenor and determines the EMI amount.
You can use an EMI home loan calculator to evaluate the precise EMI amount that you would need to pay based on the interest rate and chosen tenor.
Borrowers first need to decide between floating and fixed interest rates. With the floating interest rate, the interest rate and hence the EMI fluctuates as per market conditions. On the contrary, fixed interest rates are subjected to no changes despite any probable alterations in market conditions. Each comes with its own set of pros and cons. Hence borrowers need to weigh them out and decide which of them is caters to their requirements.
Tip 3: Look Out For Financial Institutions That Comply With Government Schemes
Reputed NBFCs like Bajaj Finserv offer the best Home Loans in India in compliance with Government schemes like Pradhan Mantri Awas Yojana. PMAY lends the credit scheme features like subsidised interest rates (6.93%) among other beneficial features for eligible borrowers.
Tip 4: Check The Home Loan Eligibility Criteria
- Work/business experience of minimum 3 (salaried) or 5 (self-employed) years
- Should be a resident of India
- Should be between 25 to 70 (self-employed), or 23 to 62 (salaried) years of age
One can look out for their loan eligibility with the help of a home loan eligibility calculator. All that one needs to do is –
- Put in the required details regarding the type of occupation, tenor, location, date of birth, type of loan to avail, total monthly salary, and currently running EMIs, if any.
- Now, click on the ‘Check your eligibility’ tab in your home loan eligibility calculator and get an accurate idea about the credit amount you can avail based on your monthly income.
Along with the required eligibility criteria, borrowers need to make sure that they have the required home loan documents including photographs, ID proof, bank account statements of the last 6 months, KYC documents, address proof, etc.
In addition to the above, do make sure that you evaluate the location of your chosen property, and go for the lender providing maximum LTV. A higher credit score promotes credibility and makes the lender more willing to lend a higher credit amount.
