Applying For A Home Loan? Here Are Some Dos and Don'ts

Even homebuyers who find the house hunting experience exciting do not feel quite the same way about the process of getting a home loan. The sad truth is that it can be a daunting process for everybody concerned.

With a little patience and careful planning, you can get the best home loan deal to buy your dream house.

MakaaniQ tells you the dos and the don'ts of getting the home loan.

Dos and Don'ts

• One of the most important things you have to keep in mind while applying for a home loan is that you should do everything to ensure that you are financially set and stable. If you make sure that you have everything in check and record, such as your credit and savings and paperwork, your home buying process will become easier than you think.

• Try to pay your loan equated monthly instalments (EMIs), credit card bills and other bills on time. These things are important, especially six to eight months prior to the time you take the home loan. This will ensure that your credit score is at its best.

• If you have delayed your payment by a few days (i.e. in case of days past due- DPDs, reflecting in your credit report) or if there are other discrepancies, keep supporting documents ready. This will save you some time in credit appraisal of advances.

• Do not make big purchases right before applying for a home loan. This may affect your financial corpus for a down payment. For instance, many home loan buyers purchase mobile phones, cars, or home appliances on instalments without realising that this will affect their credit score while applying for a home loan.

• Do not think that the rate of interest (ROI) is the only cost of credit you have to bear. It is not just the home loan equated monthly instalments (EMIs) you have to pay, but also other expenses like stamp duty, registration fees, pre-payment charges and processing and conversion fee.

• To apply for a larger home loan amount, you should show the lender that you have a higher repaying capability. This can be done by adding the co-applicant's income in home loan eligibility. You can also present other sources of income both regular and irregular in nature, like rental income, or by including the reimbursements that reflect in the bank statement.

• Do not forget to check if the house you are buying satisfies all legal and technical requirements. For instance, if you are buying a resale property, make sure that the title is clear and that you have all transfer documents in records. The agreement to sell (ATS) must be in records before applying for a home loan of a resale property because the loan will be sanctioned based on the selling amount fixed according to the ATS.

Similarly, if the property is under-construction, get the agreement, approved plan of the building/flat, clearances etc.

• Do not forget the credit score. Your credit score influences the approval process of your home loan. If your Credit Information Bureau of India Ltd (CIBIL) score is less than 700, you must work towards improving your CIBIL score. This is why it is important to check your CIBIL score/report before you apply for a home loan.

• If you are first time home loan buyer, it is better to get your home loan pre-approved. This will give you a better picture of the home loan process. Also, you can use the provisional sanction letters to get better home loan deals in the market.