how to home loan
A home loan is a type of financing that allows you to buy, build, renovate, or expand a residential property. To apply for a home loan, you must meet certain eligibility criteria, including income, credit score, property value, and credit to value. You will also need to provide certain documents, such as proof of identity, proof of income, property deeds and bank statements.
There are different types of home loans available in the market, such as fixed rate, floating rate, adjustable rate and hybrid loans. Each option has pros and cons, depending on your budget and preferences. You should compare the interest rates, fees, features, and benefits of various home loan options before making a choice.
To get a home loan, you need to follow these steps.
Enhance your credit score by paying bills on time, reducing debt, and reviewing credit reports for errors.
Calculate your monthly income, expenses, and savings to determine how much you can afford. Use an EMI calculator to calculate the monthly payments.
Maximize your savings by setting aside some money for down payments, closing costs, and other expenses.
Compare loan rates and types of loans from different lenders. You can use a home loan comparison tool to find the best deal for you.
Find a mortgage broker that fits your needs and wants. You can check their name, customer service, and credit processing time.
Submit basic information and documents to the lender and pre-approve the loan. This will show sellers that you are a serious buyer and give you an edge in the negotiation process.
Start your search for homes by searching for properties that meet your criteria and budget. You can use the list of approved transactions to find a property that has been approved by a lender.
What is the minimum credit score required for a home loan
The minimum credit requirement for a home loan in India varies from lender to lender. The cutoff could be 700 for one and 650 for the other because scores between 650 and 749 are classified as ‘good’, and scores above 750 are classified as ‘good’, so a higher credit score improves your chances
A credit score is a three-digit number between 300 and 900 that reflects your credit history and practices. It is calculated by credit bureaus like CIBIL based on your payment of loans, credit cards and other expenses. You can check your credit score once in a year for free from CIBIL website
A credit rating can help you get a home loan with lower interest rates, higher loan amounts, faster approvals, and less paperwork. A lower credit score can reduce your chances of getting a home loan or paying higher interest rates and fees. Therefore, it is advisable to improve your credit score before applying for a home loan.
Here are some ways to improve your credit score:
Pay your EMI and credit card bills on time and in full
Avoid any loans or debts
Maintain a low credit utilization rate (percentage of your credit limit applied).
Usually don’t apply for a loan or credit card in the short term
Review your credit report regularly and correct any errors or discrepancies
What is the interest rate for a home loan
Home loan interest rate in India depends on various factors like lender, loan amount, credit score of borrower, type of loan etc. According to web search results, current home loan interest rates in India range from 8.30% to 11.00%12. The lowest home loan interest rate is offered by Bank of India at 8.30% p.a.2, followed by Bank of Baroda, Punjab National Bank, Canara Bank, SBI, Union Bank of India, LIC Housing Finance and Indian Overseas Bank offering home loans with interest rates starting from 8.40% p.a.2.
You can use the home loan comparison tool to find the best option for you based on your loan amount, tenure, income and credit score. You can also use an EMI calculator to calculate your monthly repayments and total interest.
