Applying for a home loan? Here are 5 important tips for you

If you want to buy your dream house but have a money crunch, you can go for a home loan. With the help of Home loans, you can buy the home which you want. However, home loans are more complicated than education loans, business loans, and personal loans. You need various documents, and it usually takes more time.

home loan

Following are the five tips you can use to get the home loan to buy your dream house:

1. Documents and other formalities:

There’s no doubt that you need to go through many different formalities to get a home loan. You need to keep your documents in place so that when required, you can provide them. Home loans are more complicated than other loans. So you need some documents ready when applying for one. This is not the case with loans like business loans, personal loans, education loans, auto loans, etc. You can keep basic documents such as Aadhar Card, Pan card, and proof of current address in place. Moneylenders may also ask for passport size photographs and other documents like proof of your income tax and so on.

2. Check the rate of interest and select the bank:

Once the loan is sanctioned every month, you will be charged a home loan interest rate which you will have to pay. Unlike other loans, home loans have higher rates of interest. You need to check which home loan interest rate suits you and then apply for it. You can do this beforehand and then apply for the loan. Seeing the interest rate and comparing it with others will give you an idea of what interest rates are going on in the market and which one you want to go for.

3. Loan needed and eligibility:

Once you’ve selected the bank or financial institute you want to apply for, the next step is to decide how much loan you require. Most banks and financial institutes check your annual income and then give you the amount you need. Usually, banks or financial institutes might give 5 or 6 times more funds than your annual income. Loan eligibility differs from bank to bank. Banks or financial institutes may even check the property for which you want to take the loan and then sanction the loan. You can get the best deal by discussing it with the bank or financial institute.

4. Check the tenure for which you are taking the loan:

Like interest rates, the tenure to pay back the home loan also differs from bank to bank. After choosing the bank, you need to check for what term they are offering the loans for. Compared to business loans, education loans, personal loans, and auto loans, the tenure for home loans is usually longer. Checking the tenure for which you are getting the loan is important because, depending on this, you will know how much interest rate and EMI you have to pay.

5. Saving Tax:

After you’ve sanctioned the loan, you can check how much tax is deducted. By taking home loans, your taxes can be deducted.

The Bottom line:

Home loans have a lengthier process to get sanctioned as compared to other loans. Before getting the loan, you need to check the interest rate, the tenure the bank or financial institute offers, and keep your documents in place. You can check Finserv MARKETS for more.