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Buying a home is a major investment but one that will hold you in good stead when it comes to financial security. It is one of the most beneficial assets you can own, whether you choose to live in it yourself or use it as a source of income by leasing it out. You can make the purchase a little easier on your finances when you avail a home loan, but remember to do your research in order to secure the best loan offer. Comparing the current home loan interest rate offered by various home financing institutions is crucial for your financial well being, as is using a home loan calculator to plan your repayment.
While selecting the right home loan is one aspect of becoming a homeowner in 2021, there are other important considerations to keep in mind when you avail of a home loan. Here are the 5 most pertinent factors to keep in mind when you’re shopping for a home in 2021.
Choose a Property Without Legal Hassles
When buying a property, ensure that there are no legal disputes concerning it. The property should have all relevant paperwork in place with a clear title. The building must also meet all compliance and regulatory norms. This includes all approvals from the building and municipal authorities. The property should also comply with all land use norms.
Here is a list of property-related documents that you require before you avail of a home loan:
Essential papers:
- Sale deed
- Title papers
- Gift deed
When applicable:
- Succession documents
- Partition deed
- Development agreement
Keep these ready with you to have an easier experience when you apply.
Look for Immediate Possession
As a borrower, it is best to look for resale properties, homes that are almost complete, or ready-to-move-in homes to avoid complications. However, be aware that a property that is ready for possession will usually come at a higher premium than one that is still under construction. Although this factor should not deter you from going ahead with the purchase, it is important to consider it before you avail of a home loan that suits your needs and capabilities. If you are going for an under-construction property, ensure that the loan terms are suitable for you and make adjustments for delays in possession, if any.
Plan your Down Payment
Making a higher down payment is favourable as lenders view it as proof of your sound financial health, which diminishes the risk you pose as a borrower and increases your eligibility too. It also helps you get a more competitive home loan interest rate. This
also brings down your EMI significantly and makes your home loan more affordable.
Apart from this, keep in mind that the loan to value ratio is also a very important factor as it highlights the percentage of the property value that lenders will cover. For instance, lenders will grant up to 90% of the current property value as the loan amount. You must pay the remaining amount as a down payment for the house. If the down payment amount on your ideal property seems too high, then it is best to scout for properties that are well within your budget so that you can make a comfortable down payment and avail of a home loan whose repayment won’t strain your income.
Ensure you Meet the Home Loan Eligibility Criteria
The home loan eligibility criteria vary across lenders. There may be differences in the age brackets, income data, employment details, and other crucial personal information which will affect your ability to avail of a home loan. For instance, if your repayment capacity is good, lenders will offer a better home loan interest rate along with other terms and conditions that work to your advantage as a borrower. You must, therefore, compare the various offerings to commit to one whose terms you meet to ensure your financial wellbeing.
Check your Credit Score and use a Home Loan Calculator
Your credit score is a measure of your history with credit. If in the past you have defaulted or delayed on paying credit card bills, loans or lines of credit, this lowers your score. Lenders look for reliable and responsible borrowers to decrease the risk of default. If your score is less than 750, you may get a lower loan amount and be charged a higher home loan interest rate, which may be higher than the current home loan interest rate to offset the risk you pose as a borrower. If your score is too low, your application itself may be rejected. So, check your score before you avail of a home loan and improve it if need be.
Keeping these tips in mind, you can approach home ownership in 2021 with confidence. The next step is to choose the right loan with an attractive home loan interest rate and a comfortable tenor. One such offering is the Bajaj Housing Finance Limited Home Loan. It is tailored to suit prospective homeowners across the country, with a competitive home loan interest rate, a high-value sanction, a flexible repayment tenor of up to 30 years, and a range of other advantages, such as assistance with all legal and financial aspects to make borrowing stress-free. To get started, just apply online by filling out the short and simple application form and realise your dreams of owning a home.
