5 Reasons why taking your First Home Loan is not as scary as you think

First home investment holds quite a sentimental value as it marks a significant milestone in our lives. As a first-time buyer, you are bound to have inhibitions about the decision. But we are providing a comprehensive property investment guide on home loans and the worries that follow.

1)  EASY SOLUTIONS FOR COMMON HOME LOANS CONCERNS

The first concern for new home buyers is the massive numerical planning that comes with it. One must plan the budget for the next 15-25 years to apply for home loans! While this may seem daunting, you need to evaluate only a few parameters to plan your home loan.

Here are a few FAQs regarding home loan repayment tips to ease your concerns–

How would I repay huge loans?

Repayment is correlated to your monthly expenses and existing debt. To repay these loans, one must assess their current financial health and estimated net worth increment, including your total savings, debts, credit rating, and income.

One of the beneficial home loan tips is to pay a high down payment at the very start. This reduces the total interest amount paid by the end of repayment. After careful evaluation, you can allot almost 20-30% of the remaining budget dedicated to repayment.

What will be my EMI expense per month?

The next step for determining a suitable home loan amount is calculating the EMI. Practical tips before taking home loans include assessing the interest rate offered by the banks and the installment amount. To minimize your interest ratio, you must maintain a healthy credit rating.

Does it take too long to repay loans?

Making an additional EMI payment is one of the best home loan tricks and tips to reduce your repayment tenure. With flexible EMI plans, you can increase your monthly amount to reduce the number of installments.

The major advantage of reducing your tenure is that you incur a lesser total interest paid by the end of repayment.

How do I determine my eligibility for a home loan?

Yourhome loan eligibility depends on the following factors –

• Age: The minimum age to apply for a loan in India is 23 years. Retired people have low approval rates for high home loans. This factor is crucial for a lender to evaluate whether you can repay loans based on the number of salaried years left.
• Income: Your income substantiates your ability to repay loans. You are most likely to acquire lower interest rates with a higher and stable monthly income. Moreover, with an increment in your salary, you can increase your EMI and reduce your tenure.
• Employment status: Most banks also consider the status of your company– private sectors, international companies, MNCs, and government jobs. Basically, a stable income with the possibility of increments is a preferable borrower portfolio.
• Credit score: The above two factors might affect your credit score since your income affects your debt repayment. A credit score is als0 an assurance to the lender that you can repay the loan with timely EMI payments.
• Existing debt obligations: If you have too many current debts, the banks will have to reconsider your loan amount as it might indirectly affect your repayment capacity.
• Property value and LTV ratio: You are eligible for higher home loans if the property has high market valuations. Simply put, the current value and the estimated ROI on real estate will yield you a high loan amount. Hence, it is crucial to invest wisely with high-valuedproperties in Mumbai, Pune, Bangalore, etc.

2) LIST OF DOCUMENTS TO BE KEPT HANDY

You need official legal documents to apply for home loans based on the abovementioned factors.

• KYC Documents: Your basic documents such as identity proof, address proof, PAN card, ration card, passport(nationality proof), etc.
• For working professionals: Last 9-12 months of income with saving account statements, Income Tax return sanction letter for long overdue loan contracts, P&L statements.
• For business owners: Clear title certificate, shop license, partnership deed, Gumasta license, etc.

3) SIMPLIFYING THE HOME BUYING PROCESS

Besides monetary concerns, most new home buyers find the loan jargon intimidating. We have compiled primary aspects that are enough to apply for your first home loan.

Understanding terms & conditions

Every home loan transaction involves a mutual agreement. This legal contract binds the lender and borrower to abide by the long-term loan commitment. Hence, it is crucial that you go through the offer document carefully before signing the deal.

Some key terms are customer behavior in payments, agreed EMI amount, total tenure and many more.

Failure to abide by any clause will lead to legal penalties.

Interest

Some banks have pre-determined interest rates. However, you can request a lower interest on the grounds of a high credit score. You can also opt among types of levied interests such as fixed rate, floating rate, and hybrid rate loans.

4)  Easy repayment options

You can repay your loans in various ways–

1. Delayed start of EMIs
2. A waiver of EMI
3. Linking idle savings in a bank account
4. Increasing EMIs
5. Longer repayment tenure
6. A lump-sum payment in an under-construction property

Several other options exist to reduce the EMI, but we recommend increasing it to reduce the total interest.

Transferring the loan

Refinancing the loan by transferring it to another lender can also lower interest rates.

5) Joint home loan options

Taking a loan with your spouse will yield many joint home loan tax benefits.

Women are awarded special tax deductions lower than nominal rates, thus saving on your combined taxes.

Conclusion

Home loans are a great incentive to buy a home in Pune, Mumbai, Bangalore, Delhi, NCR, Hyderabad, and other major cities. Due to the high affordability index, property in Pune has been in high demand since the last decade. Also, several projects have been backed by major banks for home loans, thus deeming them a credible investment.

Kolte Patil Developers are offering many such RERA-certified projects to buy property in Pune. Hurry! Secure your dream home today with many more exclusive offers with several loan options.