10 Hacks to Have the Best Home Loan Experience

Homebuying and applying for a home loan can be a long, multifaceted process. Here are some hacks to help you stay grounded throughout the process and get the best out of it:

Home Loan Experience

1. Start by using a home loan eligibility calculator

Before you apply for a home loan, you should make use of this free, online helpful tool. A home loan eligibility calculator gives you an idea of the amount of home loan you are most likely to be approved for based on your financial profile. This will allow you to have clarity on what your home buying budget should be and how you can enhance your application.

2. Have a repayment plan in place

It is very important to understand what your cost of borrowing is going to be and how much your home loan Equated Monthly Instalment (EMI) is going to come up to. This is because a home loan is a long-term commitment, and you need to ensure to meet your EMIs regularly. For this, you can use a home loan EMI calculator. A home loan calculator will help you get an estimate of your home loan EMI so that you can budget and financially plan accordingly.

3. Check your credit score

Lenders check your credit score to assess your creditworthiness to determine your home loan eligibility. A high credit score not only enhances your home loan eligibility but also helps get a lower home loan interest rate. Hence, make sure to check what your credit score is before you apply for a home loan.

4. Improve your credit score

In case you have a low credit score, you should try to improve it before you apply for a home loan. You should make sure to clear all your dues and if you can prepay and close debt such as unsecured personal loans.

5. Arrange the down payment

When you apply for a home loan, you will only be approved for about 80% of the property value. The remaining 20% of the money you will have to save and pay as the down payment. While this percentage can differ, in India, usually most lenders require at least a 20% down payment.

6. Save for stamp duty

Other than the down payment, you should also save money for stamp duty and registration charges. These are important homebuying costs that are not going to be included in the home loan amount. You can calculate stamp duty on the home you want to buy by using a stamp duty calculator.

7. Gather all required documents

To have a seamless home loan experience, it’s essential that you understand and gather all the documents required for a home loan. This includes your KYC documents, income proof, property documents, and more.

8. Understand how housing loan interest rates work

It’s crucial to understand the difference between fixed and floating housing loan interest rates and figure out which works best for you. You can discuss this with your preferred lender and they can help you narrow down the right option.

9. Compare different lenders

The home loan interest offered, the customer service provided, the ease of the application process, and the terms of the home loan all differ depending on the lender. It’s essential that you compare all these factors before you finalise on a lender.

10. Figure out your tax savings

When you apply for a home loan, you become eligible for various tax deductions under the Income Tax Act, 1961. You should use a home loan tax saving calculator to figure out what your tax savings are going to be and how that’s going to help reduce your home loan burden.

Financial planning, knowing what is required at every step of the way, and comparing your options is the key to having the best home loan experience.

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