Deciding to get a home loan takes you one step towards owning your dream home. However, it can get stressful and time-consuming when you try to navigate the process of a home loan application.
Step-by-step Guide to Getting a Home Loan
Each loan scheme has different criteria and requirements, but there are some things you can take care of beforehand to make the home loan process smoother for you.
Here are some steps to make the home loan process easier.
Evaluate your CIBIL report
One of the most important considerations in your loan application is your credit history. A CIBIL report will list all your past loans, repayment patterns, credit card payments, etc.
Before applying for a home loan, scrutinize the report yourself to check if there are any mistakes and try to get them rectified. If there are any errors in reporting from previous lenders, it will impact your credit history, thus delaying your loan application.
The CIBIL report also gives your credit score, which should ideally be 750 or more. So if your score is less than that, try to improve it by clearing any existing debts.
Research Loan Schemes
You have a variety of loan schemes to pick from. You just need to check the requirements for each scheme on the lender’s website and evaluate the repayment terms before selecting the loan offer.
A housing loan EMI calculator can help you calculate the interest rate for your loan amount for a specific tenure. This way, you can compare different loan offers against your repayment capacity and select the loan scheme that is best suited for your needs.
Prepare Documentation
A standard document you need would be Identity proof, such as an Aadhar card, PAN Card, or Voter ID.
For salaried individuals, you need the following:
- Last 6 months’ payslips from the employer
- Proof of income tax return
- Form 16
For self-employed individuals, you need the following:
- Profit and Loss statement
- Last 3 years’ ITR statements
- Address proof, such as utility bills
- Last 6 months’ bank statements
- Property details for which the loan is applied, such as title deed, proof of sales, etc.
Try to gather all this documentation beforehand and attach it with your loan application. If lenders must request documents from you at every step, it will increase the processing time for the application.
IncomeTax Benefits Associated with a Home Loan:
Have Processing Fee Ready
Every home loan has an associated processing fee that you need to pay towards evaluating your credit reports, property value, and other associated expenses.
The processing fee is usually 1-2% of your loan amount, so make sure you have the required amount set aside when you apply for the loan.
You can also consider paying a higher downpayment to reduce the overall loan amount on your house purchase.
Negotiate Loan Offers
When you have a sanction letter or loan offer from a lender, make sure to negotiate for the loan you want.
You don’t need to settle on the first offer you get. Have a specific amount in your mind beyond which you won’t accept the loan offer. Then bargain with the lender to get the loan you need.
You can use a housing loan EMI calculator to calculate your monthly instalments based on the loan amount, interest rate, and tenure the lender offers.
Some lenders even have add-on services like pre-payment of loans at a minimal fee or no fee. Check with your lender about such add-ons before you sign any agreements.
Consider Co-borrowing
You have the option to combine the loan with another earning family member. If you can, split the loan with your spouse to increase the loan amount and reduce the repayment burden on yourself.
If you co-borrow, you can avail a higher loan since banks have added repayment assurance.
Females also get a lower interest rate on house loans, so you can reduce your overall interest payment if there is a female applicant in the loan application.
Conclusion
Before you apply for your loan, keep these factors to rid yourself of unnecessary stress when gathering and putting together your application. It’s always a good idea to research specific requirements for your loan before you apply so you don’t have to stall the home loan process due to a lack of documentation.
