If you have decided to buy a home, choosing the right home loan is a critical part of the buying process. And in most cases, the amount of loan you get plays a vital role in home selection. If you are a first-time home buyer, it is important to be loan-ready beforehand to avoid any delay in the approval and disbursement process.
While availing a home loan may seem challenging, you can easily handle it if you know exactly what to do. Here are a few vital tips to be home loan ready.
Maintain a good credit score
Your credit score is one of the important things that the lenders check before approving the loan request. You must maintain a clean credit history and a high score of 700 or more. Hence, it is vital that you check your credit score at least six months before applying for a home loan and if it is lower than the minimum score requirement, make efforts to improve the same. This will help you get the loan approved faster and the lender may even offer you a better interest rate.
Maintain job stability
Stability in your job is of great importance for the lenders before they approve the home loan application. To avoid unpleasant situations like fraud or desertion by the borrower during the repayment period, the lenders verify if the applicant has had a stable employment record and they have remained stable in their residence. So, if you want to apply for a home loan, ensure that you have a job stability of at least 1-2 years before you initiate the application process.
Get your finance sorted
When you apply for a home loan, the lender will approve only 80% of the property value as loan. You must pay the remaining 20% from your pocket as down payment. So, before you start the loan application process, it is advisable that you review your finances and make necessary arrangements for the down payment.
Generally, the home loan experts suggest making a higher down payment so that you can borrow less and manage the repayment efficiently. You can use the various tools like the online EMI calculator to know the exact EMI payable on the amount you want to borrow.
This will help you apply for the right loan and for the right tenure so that the repayment is hassle-free.
Pay off the dues
If you have availed a personal or a car loan before, ensure that you repay the same completely before applying for a home loan. Remember, having too many debts at the same may affect your eligibility. On the other hand, if you have repaid the dues and have a clear credit history, you can get a better offer on a home loan.
Keep the documents ready
When you apply for a home loan, you must comply with the lender-specific documentation process. Often the borrowers face rejection or delay in the loan approval because they don’t have the necessary documents. To avoid such a situation, ensure that you know about the documents required by the lender and keep it ready beforehand. Generally, the lenders ask for following documents:
- ID and residence proof
- Income-related documents
- Property-related documents
- Form 16
- Proof of business existence/registration
- Proof of business income
Now that you are aware of the vital tips to be home loan ready, do your due diligence and enjoy a hassle-free borrowing experience.