A home loan is the only means of buying a home for most. The application for the home loan is thus a crucial part of the process since the application forms the basis for the home loan approval. The borrower must have the best application to secure the loan to fulfill his dream.
Let us consult our home loan guide to avoid the common mistakes in the home loan application below.
1. Checking Credit Score
We are all aware that most agencies offering loans use the CIBIL score . The CIBIL score is a credit score that provides information about the buyer’s history of repaying loans. To get a home loan in Kerala buyers must have a good credit score. A borrower must always check their credibility via the CIBIL score before applying for a home loan. If the score is below the acceptable norms, then it can be improved before applying for the loan.
2. Research
The real estate industry is in a boom like never before. Every major bank and financial institution wants a bigger piece of the home loan pie as loans are the only means for owning a property for most Indians. As a result these players are trying to offer the best rates to attract the most number of loan seekers. By researching thoroughly home buyers can choose a bank loan that offers the best interest rates and repayment conditions. Skipping this step can cost the borrower dearly.
3. Documentation and Procedure
The fine print has all the information about the home loan and knowing these are crucial for the borrower. The borrower must understand these thoroughly and consult an expert before signing the papers. The terms should match the borrower’s ability to repay and should be no ambiguity. Many agents may try to manipulate the borrower which is a dangerous trap. The borrower should be vigilant and not blindly believe what the agent or the bank says.
4. Personal Financial Planning
Home loan repayments are made in EMIs (Equated Monthly Instalments). The borrower should allocate funds for the down payment and EMI payouts. After factoring in the monthly expenses and other commitments, borrower should decide on the quantum of the EMI payout that they can make. The home loan, interest rate and down payment can be determined based on all of the above calculations. This step is as important as any if the buyer wants to repay the loan amount on time without incurring penalties.
5. Down Payment
The down payment is a mandatory payout to be made before the loan is sanctioned as no financial institution finances 100% of the home price. The borrower should have this amount ready before applying for the loan.
Consulting a home loan guide or legal experts before making the decision to buy a home is always prudent. It is better to be safe than sorry.
