For must of us folks, having a house of our own is a big deal. It should be, after all, buying a house is perhaps the time when you most money in one go. So, not only is it a big deal but something you should be careful about. It’s not easy to be able to pay all the money you need to for buying a house. Even if you can, we will ask you to not do so. Home loan is the best way to go as you may need the savings later. You can use the saved money to repay your loan quickly . However, before you do all that, there are five things you should consider. We have them here for you to look at. So, keep reading to know the five things to consider when applying for home loan.
Five Things To Consider When Applying For Home Loan
Age/Location of Property
Among the five things to consider when applying for home loan is the age and/or location of property. Banks hesitate to offer loans on an old property as they will use it for collateral purposes. If the property is old, the bank may not be able to recover its money by disposing it off. Also, certain locations exist where the banks will not offer you loan for buying a property. It may be because the area around your going-to-be residence is affected by crime. The importance of this factor makes us put it out for you here first.
Banks always evaluate your property before loaning you the requisite money. They do so for collateral purposes. For a new property, it seldom happens that banks reject a loan application. In case of old properties, however, it can be a pain point. The bank seeks to recover its money as it stands to lose big if things go south. Hence, before the bank goes about its valuation process, conduct valuation of the property at your level, just to be sure.
Amount of Financing
Depending on the loan amount and the property’s valuation, a bank comes up with a finance percentage. It may choose to completely finance your purchase or do so partially. While the former seems nice, you should always prepare for the latter case. What if the bank is prepared to finance only 80 per cent of your requirement? That will land you in some last-moment trouble and you do not want that to happen now, do you?
Anywhere you go in India, a bank always looks at your credit score before advancing you money. A credit score is a documented proof of how good your track record is when it comes to repaying advances. This is not just one of the five things to consider when applying for home loan. It is also something to consider when you say no to using a credit card. A credit card helps you building that credit score. Sure, it will require monitoring of expenses, but isn’t the pain worth the benefit?
Among the five things to consider when applying for home loan this comes last. The reason is simple. After you are done with the above-mentioned bits, this bit is just to help you ensure you have enough finances to tackle any last-minute hurdles. Also, since you are applying for a big loan anyway, why not cut down on the small borrowings to keep your expenses under check? The less liability you carry, the easier it will be living in the new house and the big loan.