Checklist for those looking to buy Home on loan

Mar 09, 2017

Buying a house these days is not easy. The biggest deterrent is the high cost. Most people end up taking loans to purchase their houses. So its important to understand the important factors that you should pay heed to before taking the plunge.

In this article, we give you a checklist of items to assess your financial preparedness, when it comes to buying a home:

  • Lenders will only give you 80% of the cost of the property. So you need to have remaining 20% to provide as down payment.
  • Just because you want a loan of Rs X lacs doesn't mean that you will get that loan. You income levels should prove that you would be able to manage the future EMIs of the loan you need. Lenders in any case wont lend if the EMI comes out to be more than 40% of you net take home pay.
  • If you have other loans like car or personal loans, you should be capable of paying these alongwith the new housing loan you plan to take.
  • If your credit score is not good, lenders will not lend to you. So before applying for the loan, do check your credit score. If its not great, consider postponing your decision to purchase till you have a better score
  • You should have some buffers in place. So if you are unable to pay EMIs due to some reason, you should have some contingency fund to help you during such crisis times.
  • More often than not, people miss out on a lot of other (unexpected and hidden) expenses that are to be paid for too. Like Stamp duty, registration charges, preferred location charges, etc. So when you are doing calculations for your loan requirements, don't forget to include these costs too.
  • Home loan will not be you last responsibility. You also need to ensure that you are regularly saving for other goals like children's education, marriage, etc.