Planning To Buy A Home Loan? A Piece of Advice For You
A top-notch credit score or ample savings for the down payment cannot make the home loan purchase easy, as you may think. The road to your dream home can become bumpy, riddled with financial mess, if not you are not careful and discreet enough.
Makaan IQ shares some home loan recommendations.
Don't think you can carry multiple mortgages
The biggest mistake is buying multiple loans. This will not only affect your credit health report but also leave you in red for the rest of your life. Multiple mortgages can actually give you multiple pain, if not handled properly.
Banks work on the applicant's eligibility by estimating the fixed obligation to income ratio (FOIR) wherein all the existing and prospective loans are taken into account to sanction the fresh loan amount. It is recommended to apply for a fresh loan only when the other concurrent loans are about to close or have been paid off.
Also, people mess up when they make a big purchase after they get the desired home loan amount pre-approved.
A case in point is of one Raj Malhotra, who hire purchased his dream car as soon as his home loan got sanctioned. But he got the shock of his life when he realised that the lender found out about his purchase through the rating agency's report, and subsequently decreased the eligible loan amount.
Conduct an adequate home loan research and inspection
The market is inundated with a large number of home loan products and lenders. It is essential to do the ground work diligently to keep one's head above water. Information ranging from the type of lending rates to the kind of home loan facility, or details pertaining to the purpose of the loan to the various loan schemes available can be envisaged only when you establish the link between what you want and what the market is offering.
It is recommended to use the Equated Monthly Instalment (EMI) calculators available on various websites to gauge the amount that you can repay back, keeping in view your equity. Availing of the home loan without any examination would be like signing the loan contract blindfolded.
Also, you might feel during the home loan inspection process that you are doing everything right. It is always prudent to take the second, or at times the third opinion. Different perspectives will spot different issues, that will help you find solutions.
Fix your credit report
It is advisable to pre-check your credit score before the you apply for a home loan. This will help you comprehend your own credit worthiness from the lender's angle. If your score is high, you can negotiate on other parameters for a higher loan amount. And if your credit score is low, you can keep the supporting documents ready for the loan officer to reduce the turnaround time during the credit appraisal.
It is crucial to check the score in advance because the credit report at times reflect the loans that you might have never availed of. Any such data updating on the credit agency's website entails 30-40 days.
Any mistake in the credit report can lead to loan rejection, which will again be reported back and ruin the chances of getting loans in future.
Keep funds for rainy days
Home loan buyers fail to realise that the home loan purchase requires other charges too other than the principal and interest payments like administration, legal and technical fees, registration and stamp duty, cheque-bounce charges, late payment penalty, etc. Apart from these, you have your quotidian expenses and contingencies to meet for survival. Your equity must be strong enough to meet these exigencies. This will make your loan acquisition less stressful.
Get the loan pre-approved
Getting the home loan pre-approved will help you target the property which would be within your budget. This will save you disappointment in future. With a pre-approved home loan, you will secure a property with a pre-set budget in mind. You will have to incur some costs to get the home loan pre-approved but these overheads will prevent you falling into the quicksand of financial debt.