Some Rules for Buying a House on Home Loan

 

Currently, interest rates on home loans are historically low. And with a good credit profile and a good ability to pay, you can get a home loan at the lowest rates.

 

But, before applying for a home loan, there are a few important things to keep in mind, including:

• The approved mortgage loan amount depends on your eligibility, such as your income, CIBIL score, and existing liabilities.

• You need to fix other things like the price of the property you are considering buying.

After all, a home loan needs the longest commitment, as it has to pay EMI for twenty to thirty years. Paying EMI for so long can affect your finances and therefore you need to be very careful when applying for a home loan.

To make it easier for you, here are some basic rules to help you:

Know the exact budget for the purchase of your house

Deciding your budget is one of the basic rules you must follow when buying a home.

To do this, you must analyze its affordability and then decide on the budget. Doing this prevents future financial problems and keeps finances on track.

Follow the 35/50 rule

When availing a home loan, lenders ask about your existing financial obligations and commitments, including a list of your existing loans, such as personal loans, car loans, etc.

This is requested because banks generally do not lend an amount where the EMI is more than 45-50% of your monthly income.

However, it is always recommended to take a home loan where the EMI of the home loan does not exceed 35% of monthly income, while your total EMI, including all loans, should not exceed 50% of your total monthly income. . Following this will make you feel less burdened and will also allow you to save for other goals.

Credit score is an important check

A credit check is also one of the things to follow when applying for a home loan. For those who have a good credit score, it is easier to qualify for the loan while for others it becomes difficult. Banks even offer a lower interest rate on home loans to borrowers with high credit scores. This means that having a good credit profile helps you get a better deal on home loans from banks. So why not check this out before applying for a home loan? In case you don’t have a good CIBIL, wait a few months, take a personal loan for a small amount, start paying your EMI and after a few months when your CIBIL is good, apply for the mortgage loan.

Opt for a shorter tenure

Paying off a home loan for a longer period can lower your EMI. But you know? This way, you end up paying more interest, which can increase the total cost of borrowing.

This means that if you opt for a longer tenure loan to keep the EMI low, the total interest burden will increase. therefore, to keep interest costs low and get a happy loan, you should go for a lower tenure for your home loan.

Don’t forget to do your math

Not just for a home loan, doing calculations and knowing your estimated EMI is a must for any loan, be it a personal loan or a car loan. This is because doing calculations not only helps you analyze your affordability, but also helps you plan your finances accordingly. Using EMI calculators online is one of the most efficient ways to do this.

Well, this was about the basic rules that one should follow before buying a home through a mortgage loan. Following this will surely guarantee a happy loan and a financially secure future.

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