At the outset, the home loan eligibility criteria may seem similar across all lenders. Nevertheless, every lender will have their specific criteria which may qualify or disqualify you from loan sanction. For example, some lenders may expect applicants to have high credit scores to qualify for a home loan. On the other hand, other lenders may be more lax about credit scores. Or if you are self-employed, the lender may expect you to have a turnover of over one crore rupees. Check the lenders’ eligibility criteria before you apply for a home loan for your dream house.
The housing loan interest rate is perhaps the number one thing that applicants check when searching for a home loan. After all, no one wants to pay an extremely high interest rate when they can get a lower rate with another lender. The interest rate directly impacts your final loan amount. However, you should keep in mind that interest rate is just one aspect of a home loan. The lender should offer you both fixed and floating interest rates. With fixed interest rates, the rate remains the same throughout the loan tenure. With floating interest rates, the rate varies as per the MCLR or Marginal Cost of Funds. Another aspect is that if a lender offers you a low interest rate but has high processing fees, administrative charges, etc., along with shoddy customer service, then the lower rate will not be worth it.
The EMI and repayment tenure
With any type of credit, the repayment tenure and the EMIs (Equated Monthly Instalments) are directly related. The longer your tenure, the lower will be the EMIs. But having a very long tenure even at a reduced interest rate will, nevertheless, result in a higher repayment amount. The ideal home loan EMI should not be over 35–40% of your monthly income. It should be an amount that you can repay without having to live paycheck to paycheck. A housing loan EMI calculator is an invaluable tool that helps to ascertain your ideal EMI amount and loan tenure.
Home loan documents are an important aspect of the application process. You must check the lenders’ documentation requirements before settling on one. It is based on these documents that lenders approve or reject loan applications. If there are any discrepancies in your documents, you must provide supporting documents. Some of the common documentation required are proof of identity and proof of address such as Aadhaar card, Passport, Voters ID card, PAN card. Proof of income such as your latest Form 16, last three months bank statements, last two years IT returns, and so on. Another aspect of documentation is the home valuation. Lenders often outsource this part of the loan process to third-party vendors. These vendors assess the properties as per their parameters and the lenders issue loans based on the value provided by the valuer. To avoid being given a lower valuation and lower loan amount, it may be advisable to get the property valued by an independent valuer or two.
Lenders may offer additional facilities and features on their home loan products. These may include a cashback facility based on the applicant’s repayment track. Or refinance options on payments within a set period of purchasing the property. The lender may also offer insurance and 24/7 customer support to borrowers. Such features and facilities are extremely beneficial for loan borrowers so watch out for home loans that offer them.
Choosing a home loan becomes easier if you evaluate the various home loans in the market using the above points. Remember to choose a home loan lender with a great track record of impeccable customer service, extra features and benefits for borrowers, as well as improved financing solutions with the HomeSaver option offered by Standard Chartered Bank where the interest is calculated only on the amount utilised and not on the entire sanctioned amount.