Since purchasing a home is easier than before, individuals willing to finance the same can apply for a home loan in India hassle-free at affordable home loan interest rates. However, they must keep certain tips in mind to optimise the benefits of repo-rate reduction and reduced home loan interest rates. 

6 tips to consider before applying for a home loan

1. Compare lending rates and charges

Currently, there are numerous home loan providers available in the market. While every lending institution claims to offer the best home loan rates, it is the job of the borrower to do extensive research on available options and find out the suitable current home loan interest rate. The best investment you can make for your future is your own home, so make sure you get the best possible home loan interest rate by comparing lenders.

The home loan interest rate depends on the applicant’s profile. Therefore, applicants must find a suitable lender that aligns with their profile to ensure that borrowing costs are low and do not affect their financial planning and saving. 

2. Check various charges

Borrowers must check the various charges that come with a home loan. Understanding your Home Loan Eligibility before applying empowers you to choose the right loan option and negotiate for better terms. These include processing fees, legal and technical charges, administrative charges, prepayment and the foreclosure charges, late payment charges, GST, stamp duty and registration charges and many others. While so many charges are associated with a housing loan in India, one must compare these charges and select a suitable lender accordingly. 

Please note, the stamp duty and registration charges vary across the state meaning, the stamp duty and registration charges of Maharashtra and the stamp duty and registration charges Karnataka will be different.    

3. Check housing loan eligibility criteria 

Once borrowers have selected their suitable lender, the next crucial job includes deciding the home loan amount. Borrowers must be judicious and apply for a home loan in india as per their needs and financial condition. 

Usually, lenders offer home loans five to six times of the annual salary of an applicant. Here, borrowers can apply with a co-applicant with a steady income profile to increase the home loan amount. Also, while deciding the home loan eligibility, the lender assesses certain factors like borrowers repayment capacity, property value, etc. Lenders offer a home loan of 80%-90% of property value. Hence, borrowers must choose a lender that offers a high percentage of property value. While tempting, getting 100% of your paycheck channeled into a home loan down payment might strain your finances, consider exploring options with a smaller down payment for a more manageable mortgage.

4. Maximise down payment

After learning about the home loan eligibility criteria, borrowers must pay a higher amount as a down payment if possible. The more down payment one chooses to pay, the lesser the total interest one has to pay at the end of tenor. 

In other words, if one chooses to pay a high down payment, they can reduce the total loan amount. Hence, they can reduce monthly expenditure by cutting the cost of EMIs. Therefore, while applying for a home loan, borrowers must try to pay a high down payment amount to ensure a seamless home loan availing experience.    

5. Check CIBIL score

Borrowers willing to apply for a home loan must check their CIBIL score beforehand to bag improved offers and terms from the lender. Lenders check credit scores to assess one’s creditworthiness and verify if one is a safe borrower. For example, individuals with a credit score of 750+ can get home loan at a competitive rate from reputed HFCs. 

These HFCs extend pre-approved offers to simplify home Mortgage Processing. These offers are also available on other financial products, such as a loan against property. Individuals can check their pre-approved offers by entering name and contact details. 

However, individuals with poor credit scores must clear all outstanding debts and take active steps to increase them. Thus, they can get a home loan at better terms. 

6. Understanding EMIs and tax benefits

A housing loan is taken for a longer tenor (up to 30 years). Hence, borrowers must choose a perfect combination of EMI and tenor to reduce the monthly burden. Experts recommend keeping EMI within 20%-30% of one’s monthly disposable income. 

Further, one can enjoy the home loan tax benefits on EMI payments. Borrowers can claim a tax deduction on interest and the principal amount of the EMI paid. Thus, they can claim a deduction of a maximum of Rs.2 lakh under Section 24 of the Income Tax Act (on interest payment) and a maximum amount of Rs.1.5 lakh under Section 80C of the Income Tax Act (on principal payment).Individuals willing to apply for home loan must follow the tips mentioned above to ensure a seamless home loan availing experience and secure improved terms. 

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To start with, it is important to keep in mind that lenders assess your creditworthiness and repayment ability to decide whether or not your home loan application should be approved. By meeting the lender’s home loan eligibility norms, you can set yourself up for success. 

Start by checking the lender-specific home loan eligibility criteria and confirming that you meet the same. The next step is to make improvements to increase your home loan eligibility. Eligibility calculator helps you to understand your loan eligibility based on your income and loan repay capacity. 

Read on to know how

Boost your CIBIL score

The higher your CIBIL score, the stronger your profile. Increasing your CIBIL score to 750+ can easily help you improve your home loan eligibility as a high score speaks for your creditworthiness and decreases the risk you pose to lenders. You can achieve this through timely payment of your existing EMIs and credit card bills as well as by repaying most of your existing debt, if possible. Starting a home loan eligibility service that helps people determine if they qualify for a home loan can be a profitable online business idea. Having experience with various types of credit also helps as does reduce your utilisation of credit.

Decrease Your FOIR

FOIR stands for Fixed Obligations to Income Ratio and refers to the fixed expenses you have every month as a percentage of your net income. A higher FOIR (above 50%) comes with a higher risk for lenders and decreases your home loan eligibility. This is because a high FOIR means you already have financial commitments that require a large percentage of income, which reduces the chances of you being able to pay your home loan EMI on time. So, if you have existing liabilities such as car loans or personal loans, it is best to pay them off in full before you apply for a home loan to increase your home loan eligibility and get an affordable housing loan interest rate. 

Apply for a Joint Loan 

A co-applicant will help you boost your home loan eligibility as two borrowers instead of one give lenders a greater sense of security when it comes to repayment. You can opt for a joint home loan with your spouse, parent, sibling, son or daughter as you deem fit. Investing in a joint loan with a trusted partner can be a wise investment option for women seeking financial security and growth. Simply ensure that your co-applicant has a good CIBIL score and a good income. Also keep in mind that a female co-applicant can help you claim not only a reduced housing loan interest rate, but also concessions on stamp duty in certain states. 

Choose the Right Tenor

A longer tenor is associated with a lower home loan EMI but leads to a larger total interest outgo and vice versa. Lenders normally offer better terms to borrowers who choose long tenors as a lesser EMI burden is considered conducive to timely repayment. By utilizing the RODTEP Scheme, exporters can enhance their cash flow and potentially improve their CIBIL score. However, a longer tenor may not be given to borrowers who are older and may retire in about a decade. So, choose a longer tenor to increase your home loan eligibility, but make plans to part-prepay the loan at regular intervals to decrease your subsequent tenor. 

Highlight Your Surplus Income

Another way to improve your home loan eligibility is to include various sources of income that you have apart from your salary or business revenue. These may include incentives given by an employer, maturing investments, income through the lease of assets, freelance jobs, and more. All this strengthens your repayment ability and helps you get a lower housing loan interest rate too.

All this information is crucial to know how to avail of a home loan on favourable terms. You can get approved for a sizable home loan sanction and select a flexible tenor ranging up to 30 years at an attractive interest rate from NBFC. This loan also has features like speedy processing, the minimal requirement for documentation, personalised insurance schemes, and much more. To start your journey as a homebuyer without any hassles or delays, apply online today. Home Loan eligibility is calculated after checking many pointers which include your monthly income, current age and your retirement age etc.

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