Gone are the days when only celebrities or influential personalities could own a home at the click of a button. With a plethora of reputed banks and financial organisations stepping forward to finance potential home buyer’s dream, getting a home loan is on every family’s checklist. Since the RERA Act came in, there’s been a renewed interest in the real estate industry from both end users and investors. However, there are many things that you as a first time home buyer need to keep in mind before you apply for a home loan. Read on for a few tips and tricks on getting your loan approved and making your dream home a stunning reality.
Check your CIBIL/Credit score
Your CIBIL/credit score tells the bank about your financial habits and this plays a very important role in getting your home loan approved. A high score increases your chances of receiving a loan. Typically, a good CIBIL score is anything above 700 and the rest fall into the following categories:
- Above 750: Excellent credit.
- 700 to 750: Good credit.
- 600 to 700: Average credit
- Below 600: Low credit
Before applying for the loan, always check for your score and ensure it is high enough. You can check your CIBIL score here.
You can increase your CIBIL score through the following ways:
- Make your payments on time
- Keep an eye on your outstanding credits
- Check your score regularly
- Do not apply for too many loans
- Build a good credit history
- Use your credit card wisely
- Educate yourself on the types of loans you have taken/can take
Have your paperwork in order
There are multiple documents that are required when you are applying for a home loan. Additionally, you would also be required to fill out an application form for you to apply for a home loan. Always double check if the information on the documents you submit and the form you will out match. Submitting all the documents are always extremely important in your home loan process.
The following documents need to be submitted while applying for a home loan
- Filled in application (with processing fee)
- Photographs of the applicant
- Income proof
- Address proof
- Bank statements
In case you are a salaried individual, you will have to submit these additional documents:
- An employment letter from your employer
- A few copies of pay slips for the last few months
- The latest Form 16 issued by your employer
If you are an NRI looking to buy real estate, check out our blog on the important documents for NRI’s buying real estate.
Look for a good home loan option
There are a wide variety of home loans available in the market to suit the preferences and needs of applicants. The interest rates vary from bank to bank and it is a good idea to approach financial organisations and find a plan which suits you the best. Based on interest rates, home loans are classified into fixed home loans and floating home loans. Fixed home loans offer a fixed rate of interest and are not affected by market rate fluctuations. Floating home loans, on the other hand, provide different interest rates based on the prime lending rate set by the Central Bank of India and are affected by fluctuations in the market. Additionally, floating loans have lower interest rates. So, it is important to choose a credit option based on your financial habits.
Maintain a good relationship with your bank
It isn’t mandatory that you should be an account holder in the bank you are applying for a home loan in. Banks are more likely to approve your loan if you are a long-time account holder and have a good history of repayments. This might convince them to waive the processing fee or lower your interest rate.
Opt for a reputed builder
Be sure to choose a property that has been constructed by a reputed builder. Banks will approve your home loan faster if the property that you have chosen has been constructed by a well-known builder. This is because the risk factor is minimized based on the builder’s credibility and status. Lancor is one of the top property builders in South India that provide quality homes at both the hotspots of the city and the suburbs nearby.