It takes more than a heart to buy a home! It involves a great deal of research and patience along with managing the finances. Sometimes, a home may be a necessity but is it worth putting all your savings at risk? That is why, it is important to clearly think through the nuances involved in managing the finances needed for buying home as well as the upkeep.
What many think is an easy way out is depending on their bank for home loans. While it may be a good option to pay in EMIs over a stipulated period of time, it has its own set of rules and regulations that make it mandatory to pay heed. At the same time, it is not necessary that you will become eligible to obtain a bank loan in the first try. So, let’s take a look at what could help you find favour when it comes to buying your home on loan.
- Steady source of income
First and foremost, banks assess whether you have the capability to repay a loan and how much time on average would you take to do the same. It means your financial record should be steady over a period of time and should be over the amount of EMI to be paid in a month after providing for other expenses. In case, it is lesser than the amount, the bank has a right to deny the loan.
- Clear record
Financial health is one aspect that many people take lightly until they realise it when they have to get a home loan. Existing debts, delay in paying EMIs and no control of your finances can show you in a bad light which may prove detrimental to your prospects of getting a loan. Make sure you have a stable credit score called CIBIL score. Ensure all your previous debts are settled well in time which can also ensure that you are eligible for higher amounts of loans. Never shy away from increasing the capacity of your EMI if your financial status allows it. It can add to your future prospects.
- Loan it with a partner
You don’t have to go through the entire process alone lest it becomes an ordeal. The best way to move for a home loan is to have a co-borrower who can divide the EMIs. It makes the process easier as there is a cushion or a support that you can have. But be careful with the choice of the person as the person’s financial capability also matters. The bank will look at the joint capacity and then decide to lend. The person should be trustworthy whether your parents, friends or spouse.
- Increase EMIs over the next years
A facility that many banks offer is reduced EMIs in the initial years provided that the person’s income will increase in the coming years. This allows the person ample time to repay the debt without having to worry and without any change in repayment tenure. The only criterion is that the person should know for sure that the income would be increasing in order to pay higher EMIs in the later years.
- Listing additional sources of income
Repayment of loan is about the ability to meet the financial requirements, that is, ability to pay the EMIs without fail. It may include your main salary or other sources of income including deposits, freelance income, bonus from employers and rentals received by the person. This makes sure that even if your main salary falls below the EMI amount, your additional sources come to your rescue.
Be careful about interest rates charged by banks. There are two kinds of interest rates that need to be taken care of — Floating interest rate and fixed interest rate.
Buying a home for the first time can also make you eligible to avail the subsidy amounting to Rs. 2.3 lakh under the Pradhan Mantri Awas Yojana (PMAY) provided you meet the conditions laid under the scheme.
Last but not the least, always opt for a property in your capacity and yes, the down payment should be ready before time.