Buying a house is a big financial commitment. The rising real estate prices have made this dream even more challenging to realize. However, the current low home loan interest rates scenario coupled with various tax incentives have presented a golden opportunity for first-time borrowers to explore and take the plunge.
Getting the perfect house is crucial, but so is finding the right home financing. This necessitates understanding all the minor details that will get you the best offer from the bank. Here are a few ideas to help you get the best bargain on your home loan.
Home Loan Tips for First Time Home Buyers
Here are a few essential factors that can assist the first-time homebuyer to receive a better deal on loan.
- Maintain High Credit Score
Lenders look at the applicant’s credit score as one of the primary criteria before extending loans. Candidates with good scores are granted loans at very competitive rates, and the loans are also authorized swiftly. You must take actions to ensure a high score, such as:
- Paying all your credit card dues on time and in full
- Not changing jobs frequently
- Not applying for multiple loans.
Analyzing the credit score is the first step of the home loan process to check your eligibility. It depicts your financial discipline and creditworthiness to the potential lender. An excellent score enables you to negotiate a better deal at the lowest rates possible.
- Joint Loan
You can apply for a joint home loan with another working member of your family if your credit score is low. Enrolling your working wife as a co-applicant on your house loan is a sensible decision. There are multiple benefits to obtaining a joint loan with your spouse, such as
- Most lenders offer low-interest rates to women applicants
- You may also get a stamp duty concession (for women)
- As first-time borrowers, both of you are eligible to get tax benefits.
Adding a co-applicant not only improves your eligibility but is also an excellent method to lower your EMI cost, thanks to concessions available to female applicants.
- Pick the EMI and Tenure Wisely
Check your EMI affordability before taking out a loan. To determine the EMI you can afford, utilize a housing loan EMI calculator. Before settling on an EMI, it is critical to consider your current and long-term goals. As your income grows, you can progressively increase your EMI and pay off your loan in full much sooner.
However, in the current climate, always choose the tenure and EMI that are affordable. If you cannot repay a high EMI, get a loan with a long repayment period and low EMI. Then, if you have extra cash in the future, you can pay back your debt, shortening the loan period.
- Arrange High Downpayment
Although lenders can fund approximately 80% of the property value or more, making a larger down payment is preferable. This will lead to a reduced loan amount and, as a result, a lower interest payment.
- Check all Details
It is critical to read all of the home loan documents you sign before settling with a lender. Inquire about charges and penalties, including processing fees, foreclosure fees, and so forth. It is also vital to conduct extensive research and identify the lender who offers the best home loan deal that fits your requirement.
Buying a home is a dream come true for everyone. However, amid this frenzy, don’t forget to research all of the little facts of the home loan process, as they will directly impact your future financial planning. It is critical to double-check details and never be afraid to ask questions for clarity.