Purchasing a house is a huge financial commitment. You can do all the research and take an expert’s advice, but even a small mistake can cost you heavily, making the home loan process a bumpy one. While availing a home loan, you must have a farsighted approach and plan holistically. Similarly, you should also have an impactful repayment strategy that helps you repay the loan comfortably.
Here are five things you must do to ensure a smooth home loan experience:
- Consider your budget
If you have a robust financial profile, there are greater chances of you getting a high amount of home loans. However, to ensure that the loan is not a debt trap for you, you must consider your budget. Calculate your current and future expenses and income to determine the loan amount that you would be able to pay comfortably. Ensure that you have sufficient funds to fulfill other goals while paying EMIs.
- Pay your EMIs timely
For a smooth loan experience, you must pay your loan EMIs timely. Defaulting on EMI payments can not only prove expensive in the long run but can also impact your further borrowing ability. You can initiate an automated payment system to avoid missing out on the EMI payments.
- Pay a higher down payment
Ideally, lenders ask you to pay 20% of the property value as a down payment. However, paying more can reduce your loan amount and help you save money on interest outgo. When you pay a higher down payment, the lender considers you a low-risk borrower and can offer you competitive interest rates.
- Avoid availing any more debt
Before you apply for home loan, ensure to clear all your debts. This would help you get approval faster and also improve your creditworthiness and interest rates. However, even after getting loan approval, avoid availing any more debts. Applying for more loans can adversely impact your credit score and home loan eligibility. Similarly, a high debt to income ratio can affect your chances of opting for a loan balance transfer.
- Gather sufficient knowledge
You must gather sufficient knowledge about the loan before applying and also during the tenure. While availing the loan, research the lenders and pick a loan that suits you financially. You must know and compare the interest rates and facilities offered by various lenders and then decide. Similarly, read the loan agreement carefully and pay extra attention to the fine prints as they contain all the information about the loan. Government announces various changes and amendments in their economic policies that can impact your home loan. You must be aware of them too.
A debt like a home loan can be a huge burden and stressful ride. However, if managed well, it can help you buy your dream home without exhausting your savings. The above-mentioned points would help you manage your home loan well and ensure that it is a smooth experience.
