Owning your dream home is one of the major financial decisions that you’ll ever make in your life. But availing a home loan is easier said than done, right? The task lies in finding a loan that suits your needs and income. To ensure successful availability of the loan amount, we’ve listed some of the major factors that you need to consider prior to your loan application. Take a look.
Know Your Home Loan Eligibility
Home loan eligibility depends mostly on your repaying capacity. This is based on your monthly disposable income or surplus income. Factors like monthly expenses, spouse’s income, asses, liabilities and stability of income are also considered while calculating a home loan eligibility. This is a procedure for the bank to be sure about the fact that you are able to repay the loan on time. Some of the other significant considerations include age, qualifications, number of dependents financial and job stability. Higher number of dependents would mean lower repayment capacity. Banks usually limit the installments at 40-50% of the income.
Do your research
Do a thorough market research before you apply for a home loan. Besides, you should also have a good knowledge about different types of home loans and the processes that follows. For example, there are adjustable/floating rate loans, fixed rate loans and combination loans. Depending upon your financial stability and other preferences, you can decide on the perfect loan package to build your dream home. Also, do search for the best terms available in the market.
Check the current interest rates
Looking to apply for a home loan? Take a look at the current interest rates before you do. Also, make sure you are aware of the various interest rates that are offered by different banks in the country. When it comes to home loan rates, the lower the better. According to recent studies, it is shown that the interest rates have fallen to an average of 8.35%. You can also choose fixed or flexible loan rate according to your preference. In the former, the interest rate will be fixed for the entire tenure of the loan while in the latter, the rate might fluctuate.
You don’t have to worry much about the documentation process as the loan application form will provide you with a checklist of necessary documents. KYC documents such as identity/address proofs and credit/income documents and property documents are some of the most essential papers that need to be attached with your application.
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