All your life you work and toil to save as much as possible to buy your own home, after all buying a dream home is going to be the biggest moment of your life. You have selected a perfect neighbourhood and have also shortlisted a property for your home. But with the rising real estate prices, you never know if you would be able to afford that property when you actually have saved the money that is required.
Plus, you never know if somebody else also has eyes set on that property and might purchase it before you are able to take a decision. Therefore, you just can not keep on waiting for too long, you need to act to turn your dream home into a reality, and you need to act now. What if you do not have the entire amount required, you have the option of Applying for a Home Loan.
Where can I get a Home Loan?
As the name is self-explanatory, Home Loan is a secured loan that is extended by financial institutions against the purchase of a home. The home is hypothecated with the lender, but you can continue living there, and you just need to pay your EMIs (Equated Monthly Instalments) on time. As Home Loans are secured, the rate of interest is low, but the duration of repayment extends till 20 years. If you are also thinking of buying your dream home, here are 5 tips that will turn your dream home into a reality:
- Manage your credit score
A credit score reflects your creditworthiness to lenders and is the single most crucial parameter towards establishing your Housing Loan eligibility. Credit score of 600+ is considered ideal by lenders and also enables you to get the loan at lowest possible interest rates.
As such you must keep a close watch on your credit score and make sure that it stays above the specified threshold. If your credit score is lower than 600, then you must wait sometime before applying for a Home Loan. You also need to take professional help and work towards repairing your credit score.
- Save for the down payment
No lender is going to finance 100% of the value of the property. The maximum they are going to go is 75-90%. The rest of the money is to be contributed from your side and is known as the Margin money.
If you have shortlisted a neighbourhood, then make some enquiries to find out the prevailing property rates. Then you will get an idea as to how much you need to save. This planning should start well in advance and would require you to make some financial sacrifices by cutting down on your expenses and inculcating saving habits.
- Prepare yourself financially
Paying the margin money is not going to be enough. There are various other additional expenses that are not covered by the Home Loan and have to be borne by you such as registration charges, TDS, stamp duty, and so forth.
So, you need to make provision for them beforehand. Also get your financial statements and records up to date, as they will be required by the lender for processing on your loan application. Buying your dream home is an expensive proposition, so you must prepare yourself financially for taking the step.
- Shop around
Different lenders offer different Home Loan products with varied terms and conditions, interest rates, repayment terms and various other factors. So, you should check out various options that are available in the market and then decide on a particular lender.
Keep a close eye on the additional charges applicable, as they could burn a hole in your pocket without you even knowing. Also, make it a point to negotiate hard on interest rate and other applicable charges, as even a small reduction in the interest rates means significant savings in the long run.
- Understand your repayment capacity
You need to understand your repayment capacity to make sure that you are able to service the EMIs on time. Do not assume any unreasonable increases in your income level because otherwise, you might end up with an EMI that you can not afford and might lead to a default on loan.
Sit down and calculate your monthly expenses and make sure that your EMI does not consume more than 40% of your monthly income, else it would strain your finances. If possible pay as much as you can towards the margin money to reduce your monthly EMIs, otherwise you could go to an inexpensive neighbourhood where you would require lesser loan amount.
It is indeed possible to turn your dream of owning a home into reality if you act smartly, think clearly and do the necessary preparations before committing yourself to the decision.
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.