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Do you recall how you were preparing for your board exams? You would worry about formula here and a theorem there and seek help from whoever was available. But one thing was sure - if you had prepared well, you would perform well in the exams.
Availing a home loan is somewhat similar, especially in the sense of preparation. Unlike in the case of exams, you can get all the information from one source - through lenders such as Tata Capital. It provides you with all the information pertinent to the home loan and it also highlights the benefits including home loan tax benefits available to you.
Thus, preparing to qualify for a home loan is much simpler than preparing for a board exam. If you are planning to apply for a home loan, you can read about the process online. In the meantime, let’s show you how simple it is.
Ascertain the amount of home loan required
The biggest challenge in the home buying process is to cut the coat according to the cloth. Often, you start with a home that you liked and find that it is out of your reach even with a loan. Therefore, do a little bit of iteration and estimate the budget you can afford for the home which should include all sources and the amount of loan you can comfortably borrow.
Study the eligibility terms of the lender
Typically, the Home Loan eligibility conditions comprise age limit, sources of income streams – own business or salaried, documents to be submitted, the age of the property that you plan to buy, maximum loan amount and other relevant parameters. You can use the home loan eligibility calculator available on the Tata Capital’s website to find out how much home loan you are eligible for based on the information you feed into the calculator.
Sometimes, you may find that your own income is not sufficient to secure a higher loan amount. In such a case you can opt for other earning members of your family as co-applicants and the lender would consider the combined income and offer you a higher loan amount.
Study the implications of a home loan
Periodically, the governments at the centre and the states offer incentives for home loans. These could include income tax benefits, interest subsidies and stamp duties. Study them thoroughly so that you can make the best use of them to lower your cost of capital and lower your tax outflow. Remember that these benefits can accrue to co-applicants as well.
Finalize the home loan amount and the home
Based on your research and iterations you can finalize the loan amount and then proceed to zero in on the home you want to purchase. Collect all the necessary documents proving the authenticity of the property which you will have to submit to the lender along with your application for home loan. You can read about the required documents you would need on Tata Capital’s website or speak to a representative.
Study the fine print of home loan terms and conditions
When you looked at the eligibility conditions you would have seen various other parameters that affect the home loan such as fixed or floating interest rate, tenure, EMI options, processing fees, fees and charges for delayed payments and foreclosure. Discuss them threadbare and clear any doubts you may have with the lender. Remember each of these affects the contours of the home loan that you avail. Ultimately, the whole process boils down to choosing an EMI that you can afford to pay without affecting your current lifestyle too much. As you iterate you will begin to understand the intricacies and you can firm up on the home loan terms.
Maintain a high credit score
The credit score issued by a credit bureau plays an important role in deciding on the terms of your home loan. Higher the credit score more favourable will be the terms for you. If you are servicing any loans – car loan, personal loan, and education loan – then you must ensure that you have been making EMI payments promptly without any defaults. If not, you must take steps to correct them forthwith. It is not advisable to apply for a home loan if your credit score is low. One way is to close the personal loan and not apply for any other loan till the home loan fructifies. This will help you maintain a high credit score and the lender will be inclined to sanction a higher loan amount and offer good terms including a lower interest rate.
Keep updated documents ready
Typically, lenders seek documents to prove your identity, age, address, income, employment status, business ownership, banking transactions, the filing of ITRs, current loans and credit score. Along with these, you will need to keep the property documents ready. Ensure all these documents are updated at the time of application. Any laxity on this count will cause undue delay in the home loan sanction process.
It is clear that being prepared is a lot of bull work and not much brain work. Remember that you must be as clean as possible in all your dealings with the banking system. If you have any rough edges there try to smooth it out before you apply for the home loan. As mentioned earlier, consider the home loan tax benefits carefully when you apply for the home loan.
Policies, Codes & Other Documents