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8 June 2020 | 4 min read

Property 101 – Here Is Your Essential Guide To Getting A Home Loan

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Everyone knows that inflation is a very real thing, and the cost of living is only set to increase in the coming days. With property rentals looking to go the same way, it is no wonder that we are getting wary of spending our hard-earned money on rent. So what’s the alternative?

Well, if you’ve consciously budgeted money every month over the past, you might have significant savings, that will enable you to buy a house. Yes. Become a homeowner. It might seem intimidating. You might not have anyone to hold your hand through the process. But that doesn’t mean you can’t purchase a property. Buying a house is not a small decision and requires proper planning, especially if you want to take a loan for the same. And for most first-time home buyers, enough smooth flow of cash isn’t available and considering a home loan is the only logical option.

But getting a home loan is easier said than done especially for a first-timer. Here is an easy go-to guide for you. 

Eligibility 

This is the first significant thing to consider. Loan lenders will evaluate whether you qualify for a loan by looking at income, repayment capacity, age, number of dependents, etc. Talk to your bank personnel to get a clear picture of whether you are eligible or not.

Home Loan Types 

Before you apply for the loan, you should know that there are different categories of home loans available. A visit to your bank and a detailed discussion about the category that works best for you is a must before you apply. 

Home Loan Cost 

Another essential factor to consider is the cost of your housing loan. This means the interest, processing fees, administrative charges, prepayment, penalties, and others. The loan should be such that you can convert to a lower rate by just paying nominal fees. Ensure that there are no hidden charges. Also, take into consideration the EMI amount that you can pay. 

Please do not buy a house unless you have 20 per cent of its value to make a down payment. If you don’t have it, start a house fund. Invest systematically into a mix of equity and debt mutual funds. Once you hit the target, start hunting.

digibank offer attractive interest rates from two of India’s leading Housing Finance companies – HDFC Ltd & PNB Housing. Besides being digital, some critical features of digibank home loan include the following –

  • Enjoy doorstep service and a wide range of home loan products
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  • Simplified documentation and faster approvals
  • Loan approval even before a property is selected
  • Attractive interest rates with affordable repayments options
  • Transparent processes with zero hidden cost
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Improve Your Credit Score

Having a good credit score is one of the primary pillars of good financial growth. If you have a higher credit score, the interest rate on the home loan will be lower. If your credit score is not good (lower than 550 on a scale of 300-900), look at ways to improve it. Avoid taking too much debt at a time. If there are multiple loans, ensure some are paid back entirely. 

If a borrower uses over 30 per cent of his credit taking limit, it negatively impacts the score. So does a delay or default in repayment of loans and credit card dues. Fully repay the credit card dues and not just the minimum payment. 

Pro tip: Holding on to an old card with a good credit history helps. Also, keep in mind that it takes at least six months for improvements to reflect on the score.

Insurance 

You should purchase coverage that will cover the loan amount. It would help if you researched thoroughly to find out which insurance plan fits best to your needs. This will relieve you and your family from the stress of an outstanding loan (in case something unfortunate were to happen to you), as the insurance company then pays the loan. Several lenders will insist that you purchase insurance when you apply for the loan.

Documentation 

Any lender will ensure that you have the following documents: KYC or identity proofs like a valid passport, Aadhaar card, income documents and evidence, property documents, and others that your bank will ask you to provide.

Other Pointers

  • Lenders like consistency–if you have been employed or even at the same job for less than two years you may have trouble qualifying for a loan
  • Salary is treated very differently than commission or bonus. Don’t assume anything–make sure you explain every detail to your loan officer so he can give you the right guidance
  • Have your financial documents prepared in advance so you can provide exact answers
  • Be prepared for your credit to be run and to have your interest rate depend on that score. It’s also a smart idea to keep credit card balances below 30 per cent of the limit at all times.
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