Home loan prep for the newbies on the home buying front

A good credit score can prove to be fruitful for your home loan approval

Are you on the hunt for your new home in Bangalore and have zeroed in on a few options as well? If you are a seasoned home buyer, you may have already planned and set aside your finances. But if you are a novice to home buying, and are planning to opt for a home loan, then you must know that it takes a lot of careful and meticulous planning in order to realize your dream of a new home.

Here is a list of the things you must do in order to ensure a smooth home loan processing:

Get your credit score checked

Banks and financial institutions verify the applicant’s credit score and credit history before deciding on the home loan approval and interest rate. For the uninitiated, a credit score is an assessment of your lending and repayment patterns and reflects your financial stability. Get your credit score checked from an approved credit rating agency, preferably, 6 months before buying a new home. In case you have a low score, assess your credit report and solicit advice from a financial advisor to improve your score.

Pay off any existing debt

If you already have existing loans for which you are paying EMIs then it is advisable to clear them off before applying for a new one. If you are planning to take a home loan in parallel, check if the bank allows debt consolidation. Also, make sure that you pay off your credit card dues on time to ensure that it does not negatively affect your chances of being approved for a home loan.

Get your documents ready

Banks usually request a checklist of documents when you apply for a home loan, based on the income status and your spending pattern. The documents vary depending on your source of income and are also the basis on which banks decide the loan amount you can qualify for. Plan for all these in advance to ensure that you aren’t caught unawares at the time of your loan application.

Plan your down payment finance

Banks provide a loan for a maximum of 85% of the property value. Having a significant amount of income set aside for down payment conveys your credibility to the lenders and also saves you from the last minute struggle to arrange finances.

Opting for approved projects will save you from getting entangled in legal issues in the future

Go for approved projects

Opt for projects approved by banks as this ensures that the title of the property is clear. Banks approve projects only after performing a thorough security check and getting loan approvals for buying such properties is relatively easy. In some cases, builders have tie-ups with banks and offer subsidised rates or other special schemes for borrowers.

Choose your interest rate wisely

A common dilemma that many home loan applicants face is whether to opt for fixed or floating interest rates. While fixed loan rates are a safer bet as they assure a constant rate till the end of your tenure, it is better to opt for floating rates when the interest rates are too high and a fluctuation in the market will help you get lower rates. Seek help from a financial advisor in order to decide the best option based on your financial ability and the current market trends.

Make the most out of your tax savings

As a first time home buyer, you should also make a thorough check of the tax benefits you can claim from your home loan. The tax refund you get from your home loans can ensure a significant amount of tax savings.

We hope that armed with these tips, you can now make an educated and confident choice regarding your home loan application and set out on a hassle-free path to owning a new home in Bangalore.