The prospect of buying your first home can be pretty exciting; after all, it’s a place that you can finally call your own, and don’t have to pay rent to a landlord anymore. While you may have already scoped out the place that you want to buy, there are some things that you should know when you apply for a home loan.
These can be basic things from knowing what kind of loan you’re going to take up, to actual details that will be asked when you are applying for a loan. It also makes a good impression with the lender if you are already prepared with all the details that you need, instead of them asking you for each thing and you replying by saying that you don’t have it on hand at the moment.
They’ll Ask for your Credit History
This is pretty basic, since this determines whether or not you’ll get your loan approved or if you’re going to get a low interest rate.
A credit history is pretty simple. It’s a record of all your past credit payments, to check and see if you have paid them regularly or defaulted on any of the payments, regularly on credit cards and such.
A superb credit history will have all of your payments paid exactly on time, and no defaults.
The more you default, the lesser your chances of your loan application getting approved and even if it does, the interest rates will probably be higher than what you would want them to be.
Decide on your Loan Tenure
A loan tenure is how long you plan on extending the repayment period of your loan. There can be some confusion about this for people who aren’t well versed.
A longer loan tenure means that you’ll pay smaller installments, but over a larger period of time. It’s good if you don’t have a huge income that you can spend on a loan every month. But this also means that eventually, the interest can actually add up to a lot more than you imagine, overall, having you lose more money than you actually want to.
Reduce your home loan tenure and make it short which will lead to you paying higher installments every month, but with a smaller repayment period. This can be beneficial if you have a higher level of income that you can use to pay off your loan without having to worry about living expenses.
So, decide on which kind of loan tenure that you want to take, depending on how much you’re earning, and what kind of expenses you have monthly to pay off.
Be Prepared for Questions on your Income
This is pretty obvious. Any lender is going to ask what your source of income is and how much you are earning per month.
But the not so obvious thing is that you don’t necessarily have to produce one source. In case you have other sources of income, such as investments in shares, then you’ll be required to share those details as well. So, keep all those documents on hand when the lender asks for them.
They’ll want to Know your Age
Applicant age is something that lenders will also want to know. Admittedly, this detail won’t be a dealbreaker for the most part, but it’s still something to consider.
This is because they’ll take your loan tenure into account with regards to your age.
If it seems like your tenure is longer than expected, such as the age when you’re retiring, then this will be re-negotiated to make sure that you can pay off the loan before you retire.
If you’re wondering how to check all of these details and see what your chances are of getting a loan before you actually step into a bank, then you can search for home loan eligibility calculator and enter in the required details. The ending result will tell you how good your chances are for getting approved for a home loan.
This might vary, since different banks will behave differently with each applicant, so don’t take this as the final word. At Bajaj Finance, we can offer you solid advice on what you’ll need before you apply for a home loan, as well as options for home loans themselves.