Home Loan: Are you a first-time homebuyer? These financial planning tips will come in handy

Are you planning to buy your very own first home? This may sound very exciting as owning a home is a dream for many. As it requires huge investment to buy a new residential property many first time homebuyers often avail home loans. As the banks and non-banking financial companies are offering a wide range of home loan options there are ample choices for homebuyers.  

However, it’s important to consider a few factors before finalising the loan offer as it could significantly impact your budget and financial status. If you are looking for a home loan, here are a few tips that may come in handy for you.

From planning your overall budget to understanding the relevant factors like the options for the down payment, choice of lender, credit score, and EMI in proportion to your salary, you need to know about all of these before availing the loan.

What to consider before applying for a home loan?

Plan your budget: It’s important to plan your budget meticulously for acquiring the new property. You should calculate how much you can contribute from your savings or other sources and to what extent you want the loan amount. While making a note of your savings, you will further need to determine the amount that you want to take on debt. Also, make sure that your EMI payments don't disturb your regular monthly budget or impact your savings.

Credit score: The borrower's credit score plays a major role in getting a loan and there is always room for improvement. Begin by clearing your pending credit card dues and EMIs. Prior to applying for a loan, it is advisable that you check your credit score properly. A higher credit score can ensure lower interest rate and quicker approval.

Choice of lender: Find the appropriate lending institution to get a good loan offer with lower interest rate. In this case, one needs to make thorough research on different lenders and make comparisons between their interest rates, loan tenures, flexibility in loan repayment, and EMI options, among others.

Down payment: While most home loans promise to cover the major amount of your requirement, it is suggested that you maximise the down payment amount. The more the down payment amount the lesser will be the overall interest cost.

EMIs: As home loans come with the option of paying the dues in installments or EMIs, it is advisable that you calculate it in proportion to your salary. This will ensure that your EMIs don't become an additional burden or you fail to pay the installments in future.