Member Article

5 Things You Absolutely Must Do Before Opting For A Home Loan

The prices of property are sky-rocketing through the roof. Buying a home solely on savings is a possibility only for the financially well-to-do. For the rest of us, there are two options. The first is to save, invest and accumulate funds to purchase a home. The other is to opt for a house loan.

The latter is always a better decision as it allows you to become a homeowner without waiting and saving for years. However, the decision to take a housing loan is a huge one and this article will highlight 5 things you have to do before your apply to ensure you journey after the application is a smooth one.

**1. Save For A Good Down Payment: **

Sure, there are lenders who offer up to** 90%** of the property’s value as the loan amount; but this doesn’t mean you jump in with the minimum down payment required. No! Instead, try and save for a bigger, more substantial down payment.

Why? Because, when you save for a bigger down payment, you borrow less and require a smaller loan amount. Since the interest payable is directly related to the loan amount, a smaller loan amount will automatically result in lower EMIs and comfortable repayments.

**2. Work On Your Credit Score: **

While saving for a good down payment, it also makes sense to work on your credit score. The higher you are to that perfect 900 score, the better your chances of your home loan being approved and the more power you have to negotiate a lower interest rate.

https://www.hdfc.com/home-loan-emi-calculator

**3. Use A Home Loan EMI Calculator: **

Just a few years ago, most people relied on their mathematical prowess or their excel wizardry to crack their house loan related numbers. This quite often resulted in erroneous calculations and faulty financial planning. However, the interest has come to the rescue by offering you the services of an online EMI calculator.

It’s a free tool offered by most lenders and house loan aggregators. Once you’ve found one on the internet, you have to simply tap in the desired loan amount, tenure and the interest rate; upon submitting these details, you should be provided with a detailed break-up of your entire repayment process.

These tools are perfect to potential borrowers as it helps them chalk-out sturdy repayment plans and create budgets to accommodate their future monthly EMIs. Moreover, if the EMIs provided by the calculator are too large, it means you cannot afford to borrow such a loan amount. But you can go on decreasing the loan amount until the EMI you see is something you can afford to pay every month; thus these tools also help you arrive at the right loan amount.

**4. Compare Home Loans: **

Sometimes, people just go their trusted banking partner or non-banking financial institute and apply for a loan. No matter how much you might prefer this lender, it is essential that you compare loan offerings before choose a lender. Not comparing could mean that you lose out on lowered interest rates, better repayment options or higher loan amounts.

**5. Consider A Life Insurance: **

If you don’t already have one, then it makes sense to buy a life insurance policy before applying for a home loan. This is because, if you were to pass away before servicing the loan amount, the burden of paying the EMI will fall upon the shoulders’ of your loved ones. But if you have a life insurance policy, the sum assured should help them cope with repayments easily. ** If you are thinking of going in for a home loan, then ensure to do these things before you apply. They will help you get a smooth, hassle-free housing loan journey. **

Good luck and all the best!

This was posted in Bdaily's Members' News section by Mozam Khan .