Excited to buy a new home with the help of a house loan? Then make sure to avoid these 5 mistakes when applying for the loan to successfully finance your property purchase.
Mistake 1: Not Reviewing Your Credit Report and Score
When you apply for a house loan, the lender checks your credit report and score to determine your creditworthiness. Before that, consider checking them yourself and improving them if needed.
If your credit report has any errors, request the credit bureau to rectify them. Then go for a home loan with a clean report for a quick approval.
Also, see if your credit score is between 700 and 900. This will boost the chances of your loan approval since the lender will assume that you have a good repayment capacity. Plus you can get the best home loan interest rates in India. If you have a poor score, lift it by clearing any due credit card bills or loan EMIs.
Mistake 2: Not Opting for the Best Bank for a Home Loan
Usually, the best bank for home loans offer the benefits below:
- Flexible tenure up to 30 years
- Loan amount up to ₹10 crores financing up to 90% of your property’s cost
- Industry-best floating home loan interest rates in India
- Online application for faster TAT and convenience
- Tailor-made loans with easy documentation
- Pradhan Mantri Awas Yojana affordable housing loan subsidy for first-time homebuyers
- House loan balance transfers from all HFCs, banks and NBFCs in India
Seek a loan from a bank offering these perks.
Mistake 3: Ignoring the Housing Loan Eligibility Criteria
The best bank for home loans keeps the eligibility criteria simple and offers loans to both salaried and self-employed individuals. Check the housing loan eligibility on the bank’s official website and ensure to meet it.
Self-employed borrowers generally must be:
- A resident Indian
- Aged 23-70
- Earning at least ₹1.5 lakh yearly
- Continuing a business for at least 4 years
Salaried applicants generally must be:
- A resident/non-resident of India
- Aged 21-60
- Earning at least ₹1 lakh yearly
- Having work experience for at least 3 years
Mistake 4: Not Preparing the Necessary Documents
Check the documents required for a home loan on the bank’s website. Usually, the following documents are needed:
- Valid identity, address and business proofs
- Valid income proof as specified by the bank
- Property Proofs like allotment/possession letter and other documents as specified
Keep all the documents required for a home loan ready to successfully apply for it.
Mistake 5: Overestimating Your Repayment Capacity
Not estimating your repayment capacity properly can lead to a debt burden. To avoid that, review your monthly income and expenses, and settle for payable EMIs using the online EMI calculator on the bank’s website. Ensure that the EMI outflow doesn’t exceed 30-40% of your monthly income. But don’t worry much if you’ve chosen the best bank for home loans since you can go for smaller EMIs over a long tenure.
Also, don’t forget to use the online home loan calculator every time you pay the instalments to make accurate EMI payments.