Don’t be confused by all the jargon – we guide you through the home loan application process so that you ace it on your first try.
As a new home buyer, you must have applied for a home loan. But as you research the process, you get more and more confused. At this point, you fear making a mistake with the application. A rejected application can scupper your chances of getting a home loan easily.
Relax – just read our guide on acing your home loan application on your very first try. Let’s clear up a few concepts first:
* It’s not how much you earn, it’s how much you are eligible to get.
You might earn a salary of Rs 60,000 per month, but that does not mean that you can automatically get a big loan for an expensive property. Do consider loan eligibility – it is calculated on the basis of your income and age. It might be lower in case of home loans for salaried employees than for self-employed people with erratic income. When computing your income, heads like Medical Allowance, LTA and performance incentive are excluded. So, you must be careful when you use a home loan calculator and include only your take-home income components. Your eligibility determines the home loan amount you are liable to get, though the figure is the closest approximation.
* Your credit score might need a cleanup.
Here’s a handy tip for when you apply for home loan: check your credit score first. You can easily do this by entering your PAN or Aadhaar number on the CIBIL website, and enter other details as asked. The higher the score, the more your eligibility. Your credit score is low when you have either no loans to your name, or too many of them! It’s a good idea to clear up the score by repaying unpaid debts. Once you’ve done this, you will find the housing loan eligibility rising – this is now a good time to apply for the loan.
* The property must have clear titles and perfect documentation.
You might be completely enamoured of the house you wish to purchase. But have you examined its papers? It could be a blacklisted property (located inside an old building, the house has tenantable repairs done without permission, current owner has mortgaged the house multiple times) or its sale agreement may not show a clear chain of ownership. Get all the documents vetted beforehand and discuss the property credentials with the bank – if it is not possible to finance the purchase, the bank will tell you so you don’t waste time.
* Do everything yourself. You might be too busy to do all the legwork yourself, but as a first-time buyer, it is important to understand how the loan application process works. Find out about home loan interest rates across banks, the documentation process, the processing and legal evaluation charges, and the total approval and disbursal time. This knowledge will hold you in good stead in case your loan application is rejected for some reason, or if your negotiations fall through. You will be more confident the second time around.