These days, almost everyone who buys a home, avails of a home loan to fund their home purchase. Property prices have increased tremendously over the last few decades and it is now impossible for middle-class and middle-age people to buy a home solely with their savings. Home loans offer certain advantages too. They offer tax benefits that allow home loan borrowers to save a considerable amount of money. However, a housing loan is a huge responsibility. It is a big financial decision that has a major impact on a borrower’s life and its every aspect. Therefore, one must avail of a housing loan after proper planning. Let us look at some of the things that borrowers must keep in mind when availing of a home loan. 

Checklist for Indian Housing Loan

Try and Get the Lowest Home Loan Interest Rate Possible

If you are planning to avail of a home loan, talk to as many lenders as you can and try and avail of the lowest interest rate possible. Low interest rates make home loan EMIs comfortable to repay. Further, they also help borrowers reduce the total cost of borrowing the loan. 

These days, most lenders offer home loans on floating interest rates. Floating interest rate home loan EMIs increase when the repo rate increases and go down with the repo rate decreases. If you think the interest rates will go down in near future, opt for a floating interest rate home loan. However, if you are convinced that the interest rate will increase in the long term, opt for a fixed interest rate home loan. 

Choose Your Home Loan Tenor Wisely

When availing of a home loan, it is crucial that you choose your home loan tenor wisely. If you want to become debt-free as soon as possible, go for a short tenor. A short tenor will help you become debt-free soon. Further, it will also allow you to save on your interest outgo. However, a short tenor makes home loan EMIs unaffordable and this can lead to late payments and sometimes, even loan default. Thus, if you think a short loan tenor and high EMIs can leave you feeling burdened, it is better to opt for a long tenor. 

Check Your Credit Score 

Before applying for a home loan, you should know how to check your credit score. Your credit score reflects your ability to repay your loan on time. A good credit score convinces lenders of a borrower’s ability to repay without defaulting on loan payments. Lenders consider anything between 750 and 900 a good credit score and borrowers who have such a credit score are able to negotiate for better interest rates, higher loan sanctions, longer repayment tenor, etc. Before applying for a home loan, check your credit score.  If it is below 750, work on improving your credit score first and then apply for the loan. 

Use a Home Loan EMI Calculator 

Lastly, before applying for a housing loan, use a home loan EMI calculator to figure out the loan amount you can comfortably repay. The home loan EMI calculator is an easy-to-use tool that almost all lenders offer on their website. All one has to do to use this calculator is enter the desired principal amount, the rate of interest being offered and desired home loan tenor. Once a borrower enters these values, the calculator gives borrowers their EMI for their desired loan amount. If they can afford the EMIs, they can go ahead with their desired loan amount. If the EMIs seem too high, they can try out various combinations of home loan amount and tenor before they reach an EMI value that they can easily afford.