Financing for buying a new home is an important and useful tool for home buyers. The perpetration and range of home loans available has made it easier for people to own your own home. However, you should be clear on certain things before going for financing.
- Credit history: A good credit will have increased chances of getting a home loan. If you have bad credit as if you are already in debt with one bank, then it’s difficult to get a loan from another bank.
- Enhance your loan tenure: Even a slight increase in loan tenure brings down the EMI amount significantly which further increases the repayment capacity of borrower.
- Increase the down payment: As banks fund only 85%-90% of property value and rest have to be funded by the borrower itself. It is preferable to increase your down payment if you can. That amount can mitigate your debt significantly.
- Clubbing of income: As it is said, more is better. Clubbing of income of family members including children, spouse, parents increases your chance of getting the loan. Your eligibility of taking home loan also enhances with this.
- Step-up loan: Step-up loan allows a borrower to pay varying sum of EMIs over time. In beginning EMIs remain low and gradually increases with time. This increases borrower’s ability to pay & further loan eligibility is increased.
- Park your additional funds: A couple of banks allows people to park their extra funds in loan amount which decreases the interest proportionately from principal amount for the time amount is parked.
- CIBIL Score: With CIBIL Score more than 750, you can enjoy low interest rate on home loan. On the other hand, people with lesser CIBIL score have less probability of getting a loan or else they may have to pay more interest.
- Spend conservatively: During home loan repaying tenure, keep a close eye on your spending preferences and try to spend less. This will help you close the loan in a better way.
- Save up to repayment: As the foreclosing time comes nearer, you liberate yourself to spend more. Thus increasing the tenure for a reason or two. It’s better to save money and use it for foreclose the loan. Then you can spend on holidays etc. with relaxed mind.
- Understand repayment norms: In conventional loans, people had to pay extra penalties which are now banned by RBI. So, make sure you don’t pay any extra amount while closing it.