Purchasing a home for the first time can seem a little overwhelming. If you are at a stage in your life where you are considering getting your own first home, congratulations! You’re arriving at a huge milestone. Property has become expensive in recent times, and it is understandable if you need a house loan to get to your dream house. There are different banks and financial institutions present in the market today that will happily offer you great home loan plans. However, as a first-time buyer, it must be confusing for you to know who to trust.
Well, below are some tips that you can consider while applying for a home loan for your very first house.
Tips on taking a home purchase loan for first-time home buyers
1. Save as much as you can
It is suggested to have some savings that you can fall back to in times of need during your home loan tenure. The more you save, the easier it will be for you to manage your loan later. Also, savings will enable you to be generous at the time of making a downpayment. Before you apply for a home loan, make sure that you have enough savings. The bigger your downpayment will be, the better it is for you, as a big downpayment implies lesser EMIs.
Not having to pay a large sum in installments every month will help you manage all your other finances better. Keep it your goal to go as big on the downpayment as you possibly can. This step can make your entire repayment journey easier.
2. Pay attention to your credit score
To take a great home loan plan from one of the best home loan lenders, you will have to make sure that you maintain a good credit score. Major things about your home loan, such as the interest rate, could be decided based on what your credit score looks like. Your credit score lets the lender know how credible you are financially, which plays a significant role when you go to apply for a housing loan. You can maintain your CIBIL by making sure that you pay your credit card bill timely.
3. Make a plan
Plan your finances to make sure that your home loan tenure goes smoothly. You can get an estimate of what your EMIs will look like when you apply for a housing loan with the help of an EMI calculator. An EMI calculator can easily be accessed online. You will be required to put in details like your desired tenure and the loan amount that you would like to borrow, and the calculator will tell you how much you will be liable to pay as installments every month if you take that loan.
4. Know the market
There are many lenders present in today’s competitive market. While a lot of them may seem to offer you great home loan plans, do not jump to the first plan that you like. If you like a lender and the loan that they are providing, still study the market properly first before making a decision. Shortlist all the plans that you like and compare the pros and cons of it.
Compare the interest rates offered by them. It will be wise to pick the plan with the lowest interest rate. To find the best home loan for you, you will have to invest some time to know the market properly and not make a decision in a hurry.
A quick search for something like “how does the cash rate affect interest rates” can already help you get the best possible interest rate for your loan. It helps to know what’s happening in the current market.
5. Keep the documents ready
In today’s digital world, you can get an instant home loan in a few simple steps. Whether you’re taking a home loan online or offline, you need to keep all the necessary documents handy. Submitting the right documents are a major part of the process. If you feel there is a need to update any of your crucial documents, such as your Aadhaar card, pan card, etc., make sure that you do it before applying for the loan.
Only minimal documents are indeed required to apply for a loan online. However, any discrepancy in those documents can delay your loan. So, it is important to go through your documents once yourself and keep them all in one place.
How to manage the loan better?
It is one thing to take up a loan and another to manage it well. Once you have successfully taken the best housing loan, the real responsibility of handling it comes to you. Here’s how you can manage your home loan better:
1. Pay EMIs on time
Paying your EMIs on time is the easiest and most effective way of making sure that everything goes smoothly. Make sure that the first thing you do every money when your salary gets credited is to pay your monthly installment against your home loan. Any delay in the repayments can cost you extra money as late fees. If you are someone who forgets to pay the EMIs on time, you can also set up automatic deductions from your account. This will ensure that all your EMIs get paid on time.
2. Make prepayments if your budget allows
If you are in a position where you can make prepayments against your loan, you should not think twice. Any other expenses that are not necessary at the moment can wait. You can get debt free earlier if you make it a point to prioritize your loan. Any extra money that you earn during your repayment tenure shall go towards making the repayment. Your home loan finance company will appreciate this behavior, and it can have a positive impact on your credit score as well.
Summary
A house loan can be a great financial assistance for first-time home buyers. You can still buy a house of your own even if you do not have enough savings to buy it in one go. Home loans have made it possible for a lot of people to fulfill their dream of owning a home by lending them a hand.
Getting a home loan and maintaining it is not as hard as it may seem at first. You will be able to do it successfully by keeping a few things in mind, such as doing thorough research on the market, planning your finances, etc.
