First time home buyer? Keep in mind these tips for a comfortable home loan experience.
With the number of banks and NBFCs on the rise, availing of a home loan in India has become relatively easy. Taking a home loan is a landmark financial decision of your life and should be evaluated carefully so as to ensure financial stability.
If you are looking to make your home loan as carefree as possible, here are a few tips you must keep in mind.
Keep your credit history in check
The importance of credit score cannot be stressed upon enough, as it's one of the most influential determinants of your loan application's status. Having a good score not only increases the chance of you getting a loan, but also helps you in getting a lower interest rate. How, you ask? Financiers usually check your credit history, including previous loans, repayment track records, and more. The better your credit history is, the more likely you are to get a loan at a lower interest rate. This is because you aren't considered a risky investment by the lenders. At the same time, if your credit history is weak, you will have to shell out a higher amount on interest if at all you get a loan.
Research, research, research
As mentioned earlier, there are simply too many lenders in the market offering home loans at different rates. It would be unwise on your part if you jump into a loan deal without any prior research. While looking at the interest rates you should also pay heed to the additional benefits that come with the loan. For instance, some banks and NBFCs offer nil foreclosure charges and other key benefits to make your repayment easier. Also, keep a close watch on the various offers that lenders launch during the festive season. Make sure to compare rates and benefits of 4-5 major financiers before opting for one. You can also calculate home loan EMI based on the interest rates to figure out how much it would cost you.
Increase your bridge funding
Every bank expects you to pay a considerable amount of money as down payment before they sign off on your loan application. If you are in the beginning stages of family planning, start a savings fund to specifically tackle this situation. Doing so will drastically reduce the loan amount you'd require, thereby saving a huge chunk of money, which would otherwise be spent on paying interest. Use an EMI calculator for home loan to carefully figure out the loan you need depending on your down payment.
Don't always choose the cheapest interest rate
All the financial institutions offer two types of loans: fixed rate and floating rate and it is agreeable that, on first glance, a fixed interest loan may seem more attractive, for they come with low interest. But you should understand that such loans come with some tricky attributes. Like for instance, fixed rate loans follow the floating rate formula after the first couple of years and may end up costing you more in terms of interest paid.
Following these simple tips may well be the right thing you need to infuse some stability to your search of a home loan that suits you best.