Home Loan Tips

Check top 12 home loan tips

✓ Home Loan from ₹2 Lakhs To ₹15 Cr ✓ Multiple Lending Partners ✓ Interest Rates Starting @ 8.25%

One of the biggest decisions individuals make is applying for a home loan to buy the home of their dreams. This is not only a life-changing decision but also one with great responsibility. A home loan makes it easy for any individual to buy the home of their dreams by sanctioning anywhere between 80 to 90% of the property price as the loan amount.

 

Approval of a home loan depends on numerous factors, and it is advisable to understand them in detail before applying for a home loan. By knowing about these factors, you can also improve your loan application profile, thereby improving your chances of getting the loan in a quick and hassle-free manner.

List of 12 Home Loan Tips to Find Best Home Loan

Here are 12 home loan tips first-time home buyers can use to be home loan ready and get faster approval:

 

1. Check Your CIBIL Score: A CIBIL score is the score given to an individual by credit bureaus, which decides the creditworthiness of an individual and banks often request for credit reports of loan applicants from these bureaus to determine eligibility. This is one of the most crucial home loan tips first-time buyers must pay heed to, as a CIBIL score of 650 and above is what most banks look for to process the loan application. Higher your CIBIL score, more are your chances of getting loan approval quickly and even availing discounted rates for the home loan.

 

2. Make a Sizable Downpayment: Most banks and lending institutions are generally willing to fund anywhere between 80 to 90% of the property rate as the principal loan amount. While 10% of the property rate is what a home buyer needs to put up as a minimum, it would be better to try and give a higher down payment. 

This is an important home loan tip as the higher the down payment amount, the lesser the home loan amount needed from the bank. This will mean that your interest will be lesser, and so will your EMIs. Hence, if it is possible to put up a higher home loan down payment without hurting your financial planning, then it is ideal to do so.

 

3. Research, compare and choose: An important home loan tip for most home borrowers is knowing that different lenders are willing to give borrowers home loans at different interest rates. Moreover, some lenders also have different repayment terms and additional costs attached. Therefore, every home borrower must do their due diligence and get home loan quotes from top banks and lending institutions. 

Approaching major banks, PSUs and other financial institutions before taking the final call would be a wise choice.

Compare their rate of interest, flexibility in the repayment tenure, their overall process and post-disbursement service, etc., to decide on which lender is ideal for your home loan requirement.

 

4. Read the Repayment Terms and Documents Shared Post Home Loan Disbursal Carefully: Before signing on any document, remember to read the terms and conditions very carefully. It is important to always know what you’re getting into, understand all clauses and then sign off on the agreement as there can be charges, penalty clauses etc., which you may not be aware of, and the lender could catch you off guard later on.

Secondly, remember to take a quick look at the amortisation schedule that lenders explain because this has a breakup of your home loan, i.e., EMIs you will pay every month with the principal and interest amount split. If there are any additional charges or hidden fees being levied, you can understand by looking closely at these figures. Borrowers must also remember to ask the lender about the costs attached, i.e., foreclosure charges (if any), penalty on late EMIs, charges in case a check payment bounces, and so forth.

 

5. Apply for Home Loan Subsidy Under the Pradhan Mantri Awas Yojana (PMAY): Pradhan Mantri Awas Yojana, i.e., PMAY allows eligible home loan applicants to enjoy a subsidy on housing loans (up to 6.5%) with the Credit-Linked Subsidy Scheme (CLSS). This is a crucial home loan tip first-time buyers can make the most of as they could use this scheme to their advantage if they are eligible. This subsidy is extended to the economically weaker classes of the society, and the government of India considers the income of the entire family and not just the applicant to check eligibility for this scheme.

 

6. Know the Difference Between Fixed and Floating Interest Rates System: When you apply for a home loan, you will come across an interest rate system where you can choose between a fixed rate or a floating rate. A fixed interest rate is where you take the home loan at the interest rate finalised with the lender and lock it. However, a floating interest rate can fluctuate with market trends and increase or decrease with time. 

If you expect the interest rates for home loans to trend down, then a floating rate system would make sense. On the other hand, if you don’t want to take any chances or unnecessarily be stuck with a very high-interest rate in the middle of your loan tenure, then it is better to opt for a fixed interest rate system. 

It is important that a home loan applicant understand both these interest rate options, pros and cons, and then decide on the interest rate system that is ideal for them.

 

7. Go for a Pre-Approved Home Loan whenever possible: This is an important home loan tip that first-time buyers may not be aware of. If your credit score is good (750 or more), then banks deem you eligible for a particular loan amount even before you have applied or raised a request. This is called a pre-approved home loan offer and can be valid for up to 6 months in most cases. You can always compare the pre-approved offer a lender is extending against the other home loan interest rates offered by different banks. 

Eventually, if a lender is giving you a pre-approved loan offer, then it is in your best interest to accept it, as this stands a higher chance of getting approved and sanctioned at ease.

 

8. Compare Home Loan Offers: Remember to always compare home loan interest rates offered by various banks and lenders before you make your final selection. Take a look at some of the home loan interest rates that are offered by various partners on the Bajaj MARKETS platform:

    Bank

    Interest rate

Bajaj Housing Finance

7.10% p.a. onwards

PNB Housing Finance Limited 

7.50% p.a. onwards

Union Bank of India

7.40% p.a. onwards

Home First Finance Company 

11.90% onwards 

ICICI Bank

7.60% p.a. onwards

Shubham Housing Finance 

11.90% onwards

LIC Housing Finance

7.55% p.a. onwards

Interest rates mentioned in the above table can vary from one lending partner to the other and are subject to change.

 

9. Choose Your Repayment Tenure Wisely : Knowing what home loan tenure you want to opt for is one of the important home loan tips as most borrowers find it difficult to decide on the tenure. You can select a home loan tenure anywhere between 5 to 25 years, even 30 years, with some lenders.

It is usually ideal to opt for longer loan tenure as it reduces the repayment burden on the borrower because the EMI amount per month is lesser as opposed to EMI amounts in a short tenure loan. This will help you plan your finances better and know the loan tenure that you need for loan repayment. Another benefit of a longer loan tenure is that the loan borrower can enjoy tax benefits as long as the loan is active. Moreover, most lenders also allow borrowers to top up their loan amount, i.e., pay additional towards reducing the principal amount.

After weighing all the pros and cons, remember to select the repayment tenure keeping your financial planning in mind and as per your comfort.

 

10. Use the Bajaj MARKETS Home Loan EMI Calculator : Before you apply for a home loan, it is vital to understand the repayment schedule that you will be following for the loan tenure that you select. To help you calculate this at ease, there are tons of free home loan EMI calculators available online, like the Bajaj MARKETS home loan EMI calculator

With the help of this calculator, you can easily calculate the EMIs you will be paying to the lender every month. All you need to input in this calculator is your preferred loan amount, the loan tenure of your choice and the rate of interest offered by the lender. The calculator will show you the Easy Monthly Instalment, i.e., EMI, that you will be paying every month. As compared to the traditional calculation method, the online calculator is faster and highly accurate. Moreover, it will also help you compare loan offers from different lenders by showing you a breakup table instantly.

 

11. Check Home Loan Eligibility: One of the easiest tips for getting a home loan sanctioned smoothly is ensuring that you already fit the lender's eligibility criteria for home loan before applying. Check out the general eligibility criteria for individuals who wish to apply for a home loan:

 

  • Self-employed professionals and salaried people from the government or corporate sectors are both eligible to apply, however the candidate must be at least 18 years old and no older than 70. 

  • For salaried people, the minimum annual salary must be at least Rs. 25,000.

  • The minimum income requirement for self-employed people is Rs. 40,000.

  • For your house loan to be authorised, you should have a strong credit score, the majority of lenders want a CIBIL score of 650 or higher.

     

12. Consider Joint Home Loan: If you are looking for a higher home loan or to increase your chances of eligibility, then it might be wise to apply for a joint home loan. In a joint home loan application, the financial burden is split between co-applicants (primary applicant and secondary applicant). Some banks even offer discounted interest rates for women borrowers so it would be ideal to add your wife as a co-applicant to avail this benefit.

One of the other major reasons why a joint home loan can be beneficial is because it allows tax deduction benefits for both the applicants if they are co-owners of the property and jointly contributing towards the home loan repayment. This makes the tax benefit double for the same loan amount, which is a great way of saving more while repaying the loan.

Conclusion

Applying for a home loan can be a cumbersome task if you haven’t prepared yourself in advance. Be it understanding the eligibility criteria, keeping all necessary documents handy or knowing your credit score in advance, it is crucial to be ready and research in advance before you apply for a home loan. If you want to be ready for a home loan and make informed decisions, follow these home loan tips to the tee!