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Things to keep in mind before applying for a house loan

Getting home loans involve a lot of paperwork and documentation. Imagine having to first hunt for a house you really want to buy and then, go through the time-consuming procedure of applying for a home loan. Exhausting, isn’t it?

You are required to consider a number of things in order to get a home loan that suits your requirements. So, to make things easy for you, here are some points you should consider before applying for a home loan so that you can smoothly run through the complete process without any hassles:

Know your loan eligibility: The loan amount to be sanctioned by the banks depends on your past records of repaying loans, credit card dues and your income. Therefore, before taking up a loan, you should be clear in your mind of the EMI you are willing to shell out every month.

Clean Up your Credit Report: The one thing that all loan providers refer to before sanctioning your loan is your Credit Report. All lenders expect you to have a clean credit history with a good credit score of 650+. For this, you will be required to check your CIR (Credit Information Report) as well as your credit score online at least 6 months prior to applying for the loan. This will give you sufficient time to set your score right if there are any problems.

Choose your lender: Before applying for a loan, you will need to do an in-depth research to find a bank or financing company for the same. You should check with at least 4-5 banks and companies to know their terms and conditions of offering a loan, interest rate and tenure. Also, you should look at other aspects like customer service and charges for early termination of the loan etc.

Tenure of the loan: The EMI of the home loan is calculated on the basis of the amount you’re requesting, the interest rate and tenure. Note that the EMI is inversely proportionate to loan tenure. If the loan tenure is long then the EMI amount will be low and if the loan tenure is short, the EMI amount will be high. So, you should weigh all your alternatives before finalising anything.

Type of interest rate: There are two types of interest rates on loans – fixed rate and floating rate. In case of home loans with fixed rate of interest, the amount of EMI does not change during the tenure of repayment. While in the case of floating interest rate, the amount of EMI changes along with the change in interest rate.

Know about extra charges that need to be paid: You must get complete information about the extra charges that you will have to pay such as the processing fee, service and administrative fee, etc.