We all dream of a beautiful house of our own at some point in our lives. We either purchase a home in some nice locality of the city or wish to build at our desirable location. But oftentimes, we do not have sufficient savings to cover the expenses that are going to be needed while constructing a house, since home construction is a great investment, and it requires quite a big amount of money. In conditions like this, one might want to take financial help from some legal and trusted sources. A home loan can be one such help. If you are thinking about the same, let’s learn more about everything you should know about home loans.
What Benefits Do Home Loans Give?
Instant Loan approval: Online applications for home loans have made the procedure so much easier that you get the loan amount deposited in your bank account within 48 hours of KYC and other necessary documentation. It is a hassle-free and swift process which gives instant loan approval
Flexible tenures for you to repay: You can enjoy easy repayment of a home loan according to your chosen period. Generally, the tenure banks offer to repay your loan amount for a home loan is between 12 months to 5 years, which makes it convenient for the borrowers.
Zero hidden charges: Apart from the necessary processing charges, applicable GST, and other documentation and additional charges, there are no other hidden charges that are there to mislead the borrowers, making the process efficient and transparent to the borrowers.
Easy loan amount: Loan amount is never a difficulty for eligible applicants. You can enjoy a sufficient amount of funding for a home loan of up to 15 lakhs and reach the goal of building your dream house.
Opportunity for your funds to grow: There’s always an advantage of quick turnaround time and better technology. A home loan helps you save the tax involved in the plot/ flat registration process and gives opportunity to let your funds grow progressively.
Wide pool of loan providers: Getting a loan accepted online is easier and more convenient in today’s technologically advanced world. There are over thirty banks across India. People have a vast range of options when it comes to getting a home loan as per their requirements.
How Can You Get a Home Loan at a Low-Interest Rate?
Taking out a loan is a significant long-term commitment. As a borrower, you must be diligent in examining all fees and rates to evaluate whether the loan is financially sustainable or not. In terms of interest rates, the applicants can compare them to those offered by other banks to get a clear picture of their financial plans and expenditures.
A home loan is one of the most cost-effective financing options if leads to a low-interest rate. The most essential factor in determining how easy or difficult it will be to repay the loan is the interest rate.
Home loan interest rates vary from one bank to the next. A home loan with minimum down payment and documentation requirements are straightforward to secure. A higher interest rate may not make it possible for you to accept a larger loan or might force you to choose a longer repayment period resulting in a future burden for you. On the other hand, a lower interest rate allows you to borrow more money and may result in faster prepayments.
However, various interest rates are offered by financial institutions and housing finance organizations, which fluctuate over time.
Let’s Know What Are The Factors That Influence The Interest Rates of a Home Loan:
Gross income: Meaning, if you have a higher disposable salary, chances are high that you will get a home loan of your desired amount and the interest rates can be negotiable. The financial profile of an applicant tells a lot about the margin of risk a bank undertakes while lending the loan amount. Thus, salaried or applicants with a legit source of income are more likely to attract affordable interest rates.
Credit score: In simple words, a credit score is a 3-digit numeric figure that depicts your creditworthiness based on your past credit history, rating, and transaction history. It is the first and foremost thing to look out for a while taking up any loan because no matter how much of a loan amount you need, only a good credit score can help you get it approved.
Most of the time, a poor credit score can lead to a decline in your loan request, whereas a moderate score will help you get a loan at comparatively higher interest rates and if you have an extraordinary credit score, you may get a home loan at significantly lower interest rates.
In this regard, it is important to maintain a good credit history by timely payments of bills and other repayments. Otherwise, it gets quite challenging if you have a poor credit score.
You can choose Buddy Loan to build your credibility and get a home loan offered with low-interest rates.
Debt to income ratio: Lenders evaluate your debt-to-income ratio to determine your borrowing risk. It is the percentage of your gross monthly income that goes to paying off your monthly debt obligations. For instance, if your DTI is 15% it means that 15 % of your total monthly income is used to pay off debt each month.
- A low DTI ratio implies adequate income concerning debt servicing, making a borrower more appealing to the lenders and indicating that debt and income are in excellent balance.
- A high DTI ratio, on the other hand, indicates that an individual has too much debt for the amount of money they earn each month.
Generally, the most DTI a borrower can have while still qualifying for a mortgage is 43 percent. However, lenders normally prefer ratios of more than 36 percent.
Employer’s status: Work experience at the company where you work is also considered when determining your eligibility for a home loan. Hence, it is advisable that the applicant must possess a good employment status in the organization he/she is working. The company’s reputation and the number of years you’ve worked there demonstrate your job security and make you more reliable to the lender. The applicant must possess work experience of at least 3 years at an organization in a consistent manner.
Relationship with your lender: Maintaining a good relationship with the bank in all terms, will result in a better outcome. There are still additional elements that go into determining your eligibility for a home loan, such as your current responsibilities and the property’s technical and legal approval, which helps a lot in determining your authenticity and how honest you are in repayment terms.
Good repayment history: Before giving a loan to a potential borrower, banks and financial credit providers look for good repayment histories and low DTI ratios. Lenders favor these factors because they want to make sure a borrower did not overextend, which means they have too many loan payments compared to their income to repay. To avoid this problem, try to keep up with your repayment history and manage a healthy debt to income ratio target.
Check Your Eligibility For Availing Of a Home Loan
- KYC documents: Voter ID/ passport/ Aadhar card.
- Your employee ID or employment certificate.
- Age limit: For salaried applicants, ages should be between 23 to 60 years.
- For self-employed applicants, their age should be between 25 to 70 years.
- The eligible income should be at least 20,000 INR per month.
- The applicant should hold Indian citizenship.
- They should not have any past criminal or antisocial records.
- The applicant should have a decent CIBIL score of at least 700.
By meeting all the essential eligibility criteria, you can avail of a home loan starting from 15 lakhs. Seeking a home loan from Buddy Loan is an ideal solution as it offers you a collateral-free loan of up to 15 lakhs with an interest rate of 11.99% where you can easily repay the loan over up to 5 years and get your loan sanctioned within 48 hours of submitting the application.