Tips on Home Loan Approval for First-Time Home Buyers

Before you buy a house, you have to analyse your financial capability. Financing the purchase of your house by using only your savings can be difficult. Hence, many people take loans to buy their dream house. The process of getting a loan is pretty lengthy and a lot of factors come into play before your application for a home loan is accepted. Your eligibility for a home loan depends on your income, age, loan repayment history and job stability.

It is recomended to use a loan affordability calculator or sites like BankBazaar home loan eligibility calculator to learn maximum loan amount you can afford with your current earning. Bankbazaar eligibility calculator provides best loan amount quotes by comparing with all major banks and financial institutions in India providing home loan.

If you are looking to take a home loan, then these tips could help in making the process easier for you:

1. Make Enquiries About Your Credit Score

Credit score is a numeric expression assigned by the credit bureaus to you. This figure is determined based on your credit history and ranges from 300 to 900. If you have a credit score over 700, there is a higher chance that a lender will accept your home loan application. This is why it is crucial that you check your credit score before you apply for a home loan. If you notice that your credit score is low, you should take necessary steps to improve your credit score.

2. You Should Make a Budget for Your Homeownership Cost

The value of the house is not the only cost that you need to bear. There are a lot of other expenses that you have to pay-stamp duty charges, registration fee, GST and, paying charges to the municipality. So, keep in mind these expenses and try to reach an approximate figure of these charges so that you can have an estimate of your total loan cost.

3. Get a Pre-Approval for the Loan

If you want an assurance that you will get a home loan, make sure to get pre-approved for the same. Getting pre-approved for a home loan will depend on your repayment history and capacity.

4. Fix Your FOIR

FOIR is Fixed-Obligation-to-Income. This is the ratio of your net monthly income to your total payment of all loans. If this ratio is 50 and more, your loan application might get rejected. It is always better to close your loan and pay all credit card dues for decreasing the ratio.

5. Your CIBIL Report Should Be Error-Free

The credit bureaus will frequently update your credit report. Any missing update or an error on your report can negatively affect your CIBIL score. If you do find any error in the report, immediately report this to the concerned credit bureau and ask them to update the same. This will ensure an error-free credit report and a better credit score for you.

6. You Need Money for down Payment

A home loan does not cover the entire cost of your house. You will have to pay the down payment amount from your pocket. The maximum amount that you can get as a home loan is 80%-85% of your property price. The remaining amount is covered under down payment.

Buying a house not only reflects your financial stability, but also gives you a feeling of pride, and a sense of security. Keep these points in mind before you apply for a home loan so you can be well-prepared for the process.