Potential buyers looking to buy a new can settle for a home loan to meet their financing needs. Several lenders offer attractive loan deals at competitive interest rates and flexible repayment tenor.
Nevertheless, it is important to consider certain factors before knowing how to apply for home loan.
Home loan eligibility
Salaried and self-employed borrowers meeting the eligibility criteria for home loan stands a better chance of availing a sizeable loan amount and other offers from the lending institutions. Therefore, they should consider the following eligibility factors before applying for a home loan:
- They should be a residing citizen of India.
- Salaried applicants must be between 23 to 62 years of age, whereas, for self-employed individuals, the age requirement is between 25 to 70 years.
- Borrowers with a salaried income must show 3 years of working experience, and self-employed persons must provide supporting evidence of 5 years or more business extension in the current enterprise.
Upon following these easy-to-meet eligibilities, a borrower is one step ahead in the home loan application process.
As a part of home loan eligibility, applicants must also present some essential documents for verification.
Documents required for a housing loan
A home loan application requires minimal paperwork because of which borrowers receive the loan amount in their accounts in no time. However, arranging these documents before applying for a loan makes the entire process streamlined. Here is a list of documents borrowers must know about before learning how to apply for a home loan:
- Identity proofs like PAN, Aadhaar, Voter ID, driving license etc.
- Address proof like electricity bill, Passport, telephone or water bill etc.
- Passport size photograph.
- Business documents (Proof of 5 years business vintage).
- Income proofs like Income Tax Return.
Moreover, knowing about home loan eligibility and documents required can aid a borrower in a seamless loan transaction process. Other factors like home loan EMI, repayment tenor etc., can reduce their financial burden.
Housing loan interest rate
The interest rate on a home determines how much Equated Monthly Instalments a borrower needs to bear while repaying. Hence, applicants prefer competitive interest rates that reduce their EMI burden. Owing to that, borrowers can opt for floating or fixed interest rates.
A fixed-rate of interest means the loan interest rate remains constant throughout the loan tenor. This enables borrowers to estimate the interest payable at the beginning of the repayment tenor.
Alternatively, a floating interest rate is one where the rates change at any point in the entire tenor. Therefore, it is ideal to follow a cost benefit analysis before opting for this interest rate to ensure a borrower saves maximum.
Additionally, one must compare lenders and settle for the one offering a loan at the lowest interest rate. Also, qualified beneficiaries can avail of subsidies on their interest rates under the government-backed scheme Pradhan Mantri Awas Yojana.
Home loan tenor
Before making a long-term financial commitment by settling for a housing loan, borrowers must consider the repayment tenor. A longer loan tenor brings down the EMI amount, thereby reducing the burden, whereas a shorter tenor is ideal for interest savings because evaluation is done for a short span.
Therefore, before understanding how to apply for home loan, one must gain clarity on the loan tenor one should choose that will fetch him maximum benefits. Borrowers can use an EMI calculator to compute the EMI payable. This will enable an individual to plan his finances accordingly.
Apart from this, one must be aware of other charges associated with a home loans application process. Factoring in these charges along with the EMI will reduce the risk of missing out on repayments that can otherwise affect a borrower’s credit profile.
Therefore, borrowers wondering how to apply for a home loans must follow these pointers first.