Building or buying a new house is still a dream for many millennials today. Though most of their situation is upside down, still follow the same routine of going for a job, and saving money, thinking that their dream will come true one day.
The only way to make your dream come true is to get a home loan easily.
If you planning to build your own house but struggling financially?
Don’t worry. Here is a simple way to take your dream to the next level. If you are thinking about getting a home loan, several checklists might help you.
Having an idea of taking a home loan is easy. But a single mistake might result in rejection.
14 Checklist to get a home loan easily
1. Maintain a High Credit Score
The credit score is crucial to buying a home loan. Before entering into the credit score, check your financial status and capability of getting a loan.
Follow these guidelines to maintain a high credit score:
- Always have a reminder to pay your loan on time as it reduces risk.
- Maintaining a good level of transaction history by paying loans on time.
- Having more old credit cards helps to show more transaction history, which simplifies the procedure.
- Have a policy of one loan at a time. Paying more than one loan troubles you at some level and reduces your credit score.
- A clear financial record is essential to maintain your CIBIL score.
- Here are the various ways to increase your credit score.
2. Stable Employment Record
Employment record helps to give assurance to the lender that they can provide a loan for you. It reduces risk to the lenders as the borrower can pay the loan easily if they have a stable job.
Generally, lenders expect the borrower to need a minimum of 3 years of experience in the same working field and the minimum salary should be above Rs. 25,000. Business people need a minimum of 5 years of the same business experience.
If the borrower has a stable employment record, there is a chance to reduce the interest rate.
3. Adequate Income
Having enough income for the buyer builds confidence in the lenders as they can afford money to them. It helps the lenders to decide and give how much money they can lend you without any hesitation.
The age group of 21 to 65 is eligible with a minimum income of Rs. 2,00,000 per annum. The level of income decides the loan amount provided for the borrower.
4. Lower Your Existing Debt
While you are applying for a home loan, you should reduce other debts gradually. The borrower can take measurable actions such as making a budget plan, planning for additional income, ask suggestions from creditors as how to reduce the interest rate. Reducing the debts helps to maintain the financial stability of the borrower.
5. Save for a Higher Down Payment
If you pay a larger amount at the initial time of purchase of property, there will be a reduction in the loan amount. The interest rate reduces gradually as there is a lower loan amount. It helps you to stay financially independent.
6. Choose Your Property Wisely
Before choosing the property, review all the legal documents to ensure that the mentioned details are correct.
As the value of a loan depends on the location of the property, it is an important factor in choosing the property to get a higher amount of home loan. Decide to choose the location based on resell value and plans.
7. Documentation
As documentation is involved in the main process of lending a loan, various documents involved are
- Aadhar Card – basic identification of an individual
- Pan Card – ten unique numbers involved for transactions.
- Driving License – provides authority to drive a vehicle
- Passport size photo – proves the individuality
- Sale deed document – legal document where property title is transacted.
- Approved building plans – blueprint or sketch of the house before building
- No objection Certificate from society – legal document provided that there is no objection to building a home on that property.
8. Apply with a Co-applicant
If the borrower shares their loan with another person, then it is easy for them to save money and share their financial burden. Both the co-owners have the common right to rule the property.
The procedure for co-applicants is the same as for the borrower. The co-applicant can either be
- Spouse
- Children
- Parents
- Relatives
- Friends
9. Compare Loan Offer
Nowadays as there is a rapid increase in financial institutions, most of them come forward to provide loans.
Here you should make a wise decision as to which institution is better for you.
You need to compare various factors such as interest rate, tenure offered by the loan, loan to value, and processing fee.
10. Aware of all terms and conditions
Various terms and conditions such as income, work experience, age limit, and interest rate are mentioned in the loan application that the borrower should follow.
Before signing the loan, the borrower needs to go through the terms and conditions and make clear sense of them to avoid conflict in future.
11. Prepare for the Interview
If you are trying to get a loan from a financial institution, it is compulsory to prepare for some common interview questions conducted by the lender.
Needs to know what are the documents to be submitted, and their importance, and should have a clear knowledge of their documentation. If you have any doubts regarding the loan, you can note the questions and clear the doubts at the time of the interview.
Example: What attracts you to get a loan in this company?
12. Ensure Legal Clearance on property
The property in which the borrower is lending a loan for a particular property needs clear legal documentation. The various legal documents are
- Title Deed – mentions the name of the owner of the property.
- Encumbrance Certificate – mentions no dues or unpaid taxes for the property.
- Approved building plans – mentions the property was constructed in the correct structural way.
- No Objection Certificate – mentions there is no restriction for the property.
13. Professional Qualifications
Generally, professional qualification indirectly impacts the home loan as it is connected with the Income. This is often preferred by lenders as they need a qualified employee to provide the loan.
If you have an excellent professional qualification and a high pay package, there is a chance of getting high loan amounts.
14. Opt for Pre-approved Loans
It is a beneficial process for the borrowers, where they need not visit the lenders for the amount. Lenders come forward to provide loans for the borrower because of their stable credit records.
As it is decided by the lenders, it reduces half the process such as investigation for getting a loan amount from them.
Turn your dream house into reality from fantasy. Selecting the best loan for your property and having a smooth home loan verification process helps you to navigate into a better future.
FAQs
1. What are the types of loans?
The different types of loans are
Adjustable Loan – changes in the benchmark rate directly involve changes in interest rates.
Fixed ratio Loan – the interest rate is fixed.
Combination Loan – two separate loans given by the same lender to the same borrower.
2. Can I freeze my home loan?
It depends on your lender as the repayment policy varies from each of them. You can freeze your principal and interest for a particular period for specific reasons if your lender permits you.