Buying a home and that too on a Home Loan has to be one of the biggest decisions of anyone’s life. However, since a Loan is an amount of money that lenders give you for a tenor at interest rates, you need to repay it.
Thus, if you are financially not yet ready for the Home Loan, especially the repayment part, it would not be easy for you to manage the loan successfully. As a result, it becomes a must to determine one’s eligibility as well affordability for the desired Home Loan.
In the same context, let’s provide you some easy tips that will prepare you financially for an upcoming housing loan.
Follow these Tips and be Best Home Loan Ready
Following these financial tips will help you not only avail a Housing Loan easily but even help you manage it better during the entire course of its tenor. Have a look!
- Clean up Credit Score and Keep it Higher
More than anything that your lender will assess while approving your Home Loan application is none other than Credit Score or CIBIL Score. If you have a Credit Score that reads 750+ or more out of 900, your probability to avail a Home Loan increases. Thus, before you apply for a Housing Loan, be sure to pull out your Credit Score and resolve discrepancies if any.
Tip – You can improve your Credit Score by repaying all your credit card bills and another loan EMIs on time and at least 6 months before applying for best Home Loans.
- Clear Existing Debts
If you have multiple debts against your name and try to avail a Housing Loan, a lender may not approve it assuming you may not afford it as you have many liabilities to pay. Thus, to improve your loan eligibility, ensure to clear or pay off your entire debts at least 6 months or 1 year before applying for a housing loan online or offline. You can check your Home Loan eligibility even before applying for it via using a Home Loan eligibility calculator available free at a lender’s website.
- Chalk out a Budget
If you are trying to avail a Housing Loan of a higher amount, you will need to allocate a proper budget as per your existing income. Yes, financial experts suggest that your budget for a House Loan should not exceed more than 40% of your salary. Why? If it’s more than 40%, you may not be able to repay the Home Loan EMIs and manage other things in life. Thus, if you want to avail a higher loan amount, you can club other people’s income in your family.
- Arrange for a Down Payment
When you avail a Housing Loan, you will also have to arrange for a down payment which should be at least 20% of the loan principal. When you put down at least 20% of the loan amount that you wish to seek, you will have to repay only 80% of the amount. It will be easier to manage since there will be lesser Housing Loan EMIs. Thus, ensure to save money to put down at least 20% of the loan figure.
- Ensure to Indulge in Saving Money
Before you avail a Home Loan , you should prepare for it months in advance and indulge in some money saving habits to prepare for down payment. You can also open an assured ROI based fixed deposit plan to earn some money to put in a down payment later. Alternatively, you can also keep aside a portion of your money each month to be financially ready in time for the housing loan.
The Bottom Line
You just went through some of the vital financial as well as general tips to help you prepare for an upcoming Home Loan. Once you implement it in practice, you can easily prepare for a Home Loan without hassles. Best of luck for your Home Loan!