Three tips before you apply for home loan Availability of home loan enables millions of home buyers to fulfill their dreams. Here are three tips a home buyer should consider before applying for a home loan. Credit history: Banks undertake a thorough due diligence of an applicant’s financial health. You will be asked for bank statements of a certain period, Income Tax Returns (ITR) of the past years, Tax Deduction at Source (TDS) certificates and other concerned financial disclosures. While these documents are sourced by the financial institution directly from the applicant, credit ratings are sourced from concerned agencies. Today, an applicant can get his own credit rating report directly from these agencies. “Your credit score not only determines whether or not you qualify for a loan, but it can also have an impact on the terms and conditions you can avail on the loan,” Harshala Chandorkar, senior vice president – consumer relations, Credit Information Bureau India Limited (CIBIL) suggests. Volume of liability: The rise of the services sector in India and its subsequent impact on the middle-class has further brought a large section of the society under the realm of eligibility for this organised channel of finance. While it is good to have access to home finance, the volume of financial liability runs in several lakhs and you have to be cautious before taking it on. The financial institution will always try to determine your financial health repayment capacity on the basis of past and current financial track record and sanction the loan accordingly. What it might not be able to judge is your future, unforeseen expenditure. For that matter, you will be the best analyst for yourself. It is advisable to adopt a conservative approach in this case and take home loan as low as possible. “In an ideal scenario, 40 per cent of your salary should go in a home loan equated monthly installment (EMI),” says Neeraj Bansal, partner-advisory, KPMG. Interest rate – floating or fixed: This is one of the first questions that come to mind while applying for a home loan. It is worthwhile to go for a fixed one if the rates are relatively lower than in the past 4-8 quarters. At the same time, financial institutions have provisions to change the fixed rate of interest under certain situations. Thus, a fixed rate of interest may appear to be beneficial in the first instance but in the long term you might find yourself at the receiving end. The best approach is to clarify with the financial institution on these aspects directly. Talking to different financial institutions would also help in arriving at an informed decision. content.magicbricks/three-tips-before-you-apply-for-home-loan/
Posted on: Mon, 21 Oct 2013 06:43:01 +0000
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