5 things to consider before opting for a housing loan

3 mn read

Purchasing a home is a dream for many but it often involves a big financial undertaking, one that takes several years of wealth generation to achieve. As such, becoming a homeowner is considered to be a milestone in life and an indicator of personal success. However, given the cost of real estate today, it is wise to consider buying a home using a housing loan, as opposed to exhausting your savings completely. With manageable EMIs, repayable over a lengthy tenure, owning a home doesn’t have to come at the cost of financial instability.

While there are definite upsides to buying a home via a housing loan it is important to deliberate well about the financial move, so as to get the most out it. To get you started in the right direction, here are 5 things to consider before applying for a housing loan.

The housing loan amount you need

The amount of loan you need is a crucial detail to know, even before you apply for a housing loan. Remember that lenders will only cover between 75-90% of the total cost of the property. The remainder will have to be paid by you as a down payment. Based on the housing loan amount you need, you can approach a suitable lender. One thing to remember: attempt to make as large a down payment as you can. This means that if your lender is offering 90% financing and you only need 80% financing, go for the latter. It makes the cost of borrowing cheaper.

Your personal credit score

Your personal credit score is a key component of your financial profile that you should be aware of before you consider taking a housing loan. This score is a 3-digit number ranging between 300 and 900 and it serves as a numerical summary of your creditworthiness. For this reason, it is vital that you apply only when you have a high credit score, preferably over 750. With such a score, you not only greatly reduce the chances of rejection but also put yourself in a position to qualify for special loan deals that make repayment more affordable.

The home loan eligibility terms

Checking the lender-specific home loan eligibility criteria is important as lenders will not entertain your application if you fail to meet the terms. A rejected loan application leaves a mark on your credit history and this can cause problems for future credit. Most lenders list out their eligibility terms on their website. These may include permissible age brackets, debt-to-income ratio limits, income requirements, and other factors.

Home loan interest rate offered

The home loan interest rate offered to you dictates the cost of borrowing to a large extent. It is in your best interest to secure the lowest rate possible. A home loan calculator can help you see the financial impact that marginal changes in the interest rate make. You can get a better home loan interest rate by either improving your financial profile, so that you’re less of a risk to lend to, or prioritising lenders based on the home loan interest rate they offer.

The total cost of the housing loan

Ascertaining the total cost of the loan involves picking the right tenure, as longer tenures imply more interest outgo. However, it also involves you weighing the charges associated with loan processing, penal interest, prepayments, loan features, and so on. When some lenders relax the home loan interest rate, they may compensate for the same by raising such associated loan costs. Based on the total cost of the loan, you can decide whether the offering is for you.
These 5 pointers are sure to help you get the best home loan available to you. One of the choicest options that you can consider is the Bajaj Housing Finance Limited Home Loan. This housing loan offers you high-value funding on simple home loan eligibility terms, while granting you access to a plethora of benefits. You can get approved for a sanction of up to Rs.3.5 crore and thereby purchase the house of your dreams. What’s more, the housing loan is offered at a competitive home loan interest rate and is available for a tenure of up to 30 years. The loan also comes with perks such as property search services, PMAY interest subsidies, top-up loans, online account management, and quick processing. To take advantage of these benefits and more, apply online and enjoy a hassle-free loan experience.

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5 things to consider before opting for a housing loan

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