A "low interest" loan shouldn't mean you have very little interest in paying it back!
  • Being Home Loan Ready

    Choosing a home loan plan is as significant as choosing the property or house. And most times, the amount of home loan that can be availed also plays a role in the selection of the house. To become loan ready is a good idea, especially for first time home buyers. Although acquiring a home loan seems like a complicated task, it can be handled well if you know exactly what to do, step by step. You need a minimum of six months of preparation before becoming home loan ready, if you are financially amateur. Some of the key points that could help you be home loan ready are:

    1. Keep a Clean Credit Record:

    Your credit report is one of the most important things that a lender checks or refers to before lending to you. It is expected that your credit report is clean with a credit score of more than 650. Therefore, you must keep a check on your credit history and credit information report (CIR) and these should be checked at least six months before applying for a home loan so that you can rectify any flaws in your report. To maintain a good credit report, you must ideally never make late payments and be regular on all your credit card and EMI payments.

    2. Have Good Banking Habits:

    Lenders usually ask borrowers to submit their bank account statements when they apply for a home loan. The lenders analyse your banking habits, your expenditure and lifestyle, which can be traced if you use your debit card for most of these purposes. If a lender is going to provide you a home loan, it is expected of you to have a decent credit balance each month, which should at least be equivalent to the home loan EMI. Also, you should ensure there aren’t cases of bounced cheques for reasons such as insufficient funds. However, bounced cheques because of signature mismatch is still acceptable.

    3. Maintain Job and Residence Stability:

    Stability on your job and place of residence is also importance for lenders to find out before lending for a home loan. To avoid a situation of fraud or desertion while making loan repayment, banks or financial institution verify your job stability and stability at your present residence. Minimum of six months of stability is expected, both on the job as well as at the place of residence.

    4. Clear All Debts, if Any:

    If you have availed more than one loan, ensure they are paid off before applying for a home loan. Remember having too many loans may impact your loan eligibility. Some banks, however also provide a debt consolidation scheme. Lenders consider EMIs for other loans while calculating your home loan eligibility and with lower number of EMIs, your eligibility increases.

    5. Apply for Pre-approved Loan:

    Some banks offer pre-approved loans, implying you can avail a home loan even before finalizing on the property to be purchased. So if you are sure of buying a house within a few months, you can get your loan pre-approved by a bank. Additionally, some banks like HDFC and Punjab National Bank list out the projects approved by them on their respective sites.

    6. Research Online:

    Before taking a home loan, you should do a thorough online research to compare the rates and schemes that different banks are offering. You can choose a loan plan suiting your requirements as the market offers a huge variety to choose from.

    7. Understand Loan Process:

    When you apply for a home loan, the lender usually sends a third party vendor representative for verification. You might also receive phone calls, queries and visitors from the bank, regarding the home loan applied for. The credit department of the bank processes the loan application and is responsible for approval or declination of loan. The process of approval usually takes between four to eight days. After your home loan is approved, your sales officer helps you through the entire process, thereon.

    8. Keep Documents Ready:

    You must keep the following documents ready when applying for a home loan:

    • Duly filled application form with a photograph of the applicant.
    • ID as well as address proof of the applicant.
    • Property documents of the property you are interested in.
    • If applicant is employed, the most recent pay slip, Form 16 and bank statement of previous 6 months must be submitted.
    • If applicant is self-employed, proof of business experience, qualification certificates and ITR of the last three years need to be submitted. Business or professional applicants are also required to furnish the profit-loss balance sheet of the last three years. Bank statements of the period of six months to a year must also be submitted.

    By following these steps carefully, you can be home loan ready much before you apply for a home loan.


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