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 you can automatically get a big loan for the expensive property. Do consider loan eligibility – it is calculated based on your income and age. It might be lower in the 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 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 when you 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.: 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
* The property must have clear titles and perfect documentation.
You might be completely enamored by 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, the 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 bank’s property credentials – 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 it is important to understand how the loan application process works as a first-time buyer. 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 if your loan application is rejected for some reason or if your negotiations fall through. You will be more confident the second time around.