Home Loan Checklist For Home Buyers
Published on: 19 Sep 2024
We all know how tedious it can be to shortlist and buy your own home. The location, type of home, its area and finally the legalities of buying a home though at times, a long process, can also be very satisfying. Given how we are emotionally & sentimentally attached to our homes, it is also a big commitment and hence each step of the home-buying process must be carefully assessed. And so, we’re here to explain to you one of the most important stages of home purchasing - getting a home loan! Curious to know more? Read on..
1. Saving for your down payment
The first step begins with an evaluation of your current financial health, as it is crucial to know where you stand in future financial planning. This will give you an idea about how much down payment is required for you to book your home. It is always advisable to keep a certain amount for your down payment as you will be required to pay somewhere between 10% and 25% of the property as a down payment. For example, if your property is worth 35 lacs, you may have to pay around 7 lacs as a down payment.
For those not looking to invest large amounts, zero-down payment loans are also a good option.
2. Documentations in check
A house loan requires a large number of documentation. It’s essential to have all your documents because without them getting a home loan is not possible. Having these documents in a proper place and order will help you speed up the process. A few of the documents required for a home loan are:
- Loan application form
- 3 photographs of passport size
- Identify proof
- Residence proof
- Bank Account Statement/Passbook for the last 6 months
3. Compare, compare, compare!
Comparing loans will help you understand the loans’ actual cost. A few factors make one loan more expensive than another, like points, fees etc. When you compare, you have a better idea of the current loan rates, which will entitle you to a better deal and other feasible options.
#ProTip: Look at the loan amount, the interest rate, the monthly principal and interest payment, and the monthly mortgage insurance payment( if any).
4. Find the best type of loan for you.
A loan that fits someone else’s criteria may not be the fit for you; hence, it is essential to weigh the pros, cons & various factors before getting a loan for yourself.
For example, Banks offer many schemes like Balance transfer of home loan, Flexipay home loan, commercial home loan, loan against property, etc. A scheme that is best suited for your need should be selected to optimise for the interest rates.
#ProTip: Your loans should always be considered by keeping in mind your financial situation.
5. Read the loan agreement
Going through the loan agreement is a must. Ensure you read the loan agreement and understand all the terms and conditions. It’s important, so before you go ahead and sign it, ensure you have read everything very carefully. A few points that a loan agreement will typically include are:
- Location
- Lender & borrower
- The loan amount
- Interest & late fees
- Repayment method
- Collaterals
- Insurance
6. Take advantage of affordable housing schemes
Home buyers can now take advantage of the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY), offered by lending institutions. Besides providing interest rate subsidies, the best thing about these schemes is that they are available only to first-time home buyers. If you wish to avail the benefits of this scheme, find more details here - https://pmayuclap.gov.in/
7. Do not choose a longer repayment tenure
Choosing a longer repayment tenure will reduce the burden of high EMI, but you will pay higher interest in the long run. Hence, if you want to spend your EMI comfortably, you should choose a comparatively shorter tenure.
#ProTip: The maximum home loan tenure can be decided upon a homebuyer’s retirement age; however, several other factors play an important role. Always ask for these details from the bank you apply to.
8. Only buy a house that fits your budget and your needs
Setting a budget for buying your home involves more than the monthly mortgage payment; many other factors make a place affordable. Always keep a clear view of your basic needs and get a home that is within your budget and well-suitable to your daily life & lifestyle. Shortlist factors most important to you in the present & future and proceed with the right choice after weighing your options.
For more information & real estate-related advice, visit our experienced team at EstateMint today.
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