How to choose the best Home Loan for your first property purchase?

Buying a house is exciting and overwhelming for a first-time home buyer. However, with the right knowledge and preparation, your journey towards homeownership can be smooth and hassle-free. A Home Loan is a Secured Loan that offers financing for the purchase of a house or property. The interest rates are comparatively lower than Personal Loans.

The repayment tenure is usually up to 20 years. You need to repay the amount in Equated Monthly Instalments, including the principal amount and interest rates. The principal is the initial sum borrowed from the lender to purchase your home. The interest rate is at which the lender charges you for borrowing the money. Home Loans give you the flexibility you need, but choosing the right one is important. Here is a guide to help you:

Know your financial situation

Before applying for a House Loan, evaluate your financial situation and set a budget. Use the Home Loan EMI calculator to estimate how much EMI you can afford without overburdening your monthly expenses. Besides Loan repayments and the total cost, consider additional costs associated with the Loan, such as property taxes, registration charges, and ongoing maintenance.

Check your credit scores

CIBIL scores play an essential role in getting a good interest rate. A higher score leads to lower interest rates on Housing Loan. You must have a minimum CIBIL score of 700 and a good credit history. Get your credit report and check for any mistakes. Pay off small debts like Credit Cards before applying for the Loan.

Choose the right property

Select a property which fits your budget and meets your requirements. Ensure it has all necessary legal clearances and a clear title. This minimises complications during the lender’s verification process.

Research and choose a lender

Compare various lenders based on interest rates, Loan terms, fees, and customer service. Even a small difference in their rates leads to significant savings over the Loan tenure. Ensure you meet the lender’s eligibility criteria and gather the required documents, including KYC details, income proofs, and property-related papers.

Submit your application

When you are ready with all your documents and the duly-filled Loan application form, you can submit and upload them on the lender’s website or by visiting the local branch. Ensure your application is complete with the correct details to avoid delays.

Await the lender’s approval

The lender verifies your Home Loan application, documentation, and property before granting it. After successful verification, you receive a sanction letter outlining custom Loan terms, including the amount, interest rate, repayment schedule, and fees.

Receive funds

The approved amount is disbursed once you accept the terms and sign the Loan agreement. Be sure to clarify the disbursal process with your lender.

Conclusion

Once you receive the funds, it is best to start the EMI repayment process according to the schedule. Timely payments help you maintain a good credit score and avoid penalties. Automating payments or setting reminders can simplify the process and ensure consistency.