Resolutions are not just for the New Year. You can take them any time to stay determined and have your goals fulfilled. If you plan to buy your dream home in the next few years, a home loan can be your best source of finance to fund your purchase. However, apart from finding and applying for a home loan at the best home loan interest rate, you must take some important resolutions to plan your finances well. We have listed some resolutions that can help you plan your finances and buy your dream home in the coming years.
1.   Control Your Expenses
Try not to make any major expense 3 to 6 months before taking a loan. If you use a credit card or take a loan to make that expense, it may increase your credit utilisation ratio or debt-to-income ratio respectively and reduce your creditworthiness. When you apply for a home loan, lenders check your credit score to see how responsibly you handle your finances. If you are already indebted heavily or habitual of missing or delaying EMI payments, the home loan providers will perceive you as a high-risk borrower and reject your loan application.
2.   Improve Your Credit Score
Your credit score plays a crucial role in determining your loan amount and home loan interest rate. Ranging from 300 to 900, the closer you are to 900, the higher loan amount you may borrow at a lower interest rate. On the contrary, borrowers having a low credit score may either get their loan application rejected or the lender may charge them a high interest rate.
Check your credit score and see where you stand. If you have a lower credit score than your lender’s minimum requirement, take a resolution to improve it. Some of the best tricks to make it happen include paying your credit card bills and loan EMIs on time, diversifying your credit profile with different types of loans, and maintaining old accounts to prolong your credit history.
3.   Keep an Eye on Lenders
While you plan to apply for a home loan to buy your dream home, you must keep an eye on the available lenders. You may come across hundreds of home loan providers seeming to be better than the others. However, you need to do some research and compare them before finalising a lender. Apart from the loan amount and interest rate, you must look at several other factors while comparing lenders, including their fees and charges, repayment terms, eligibility conditions, documentation requirements, customer service, and others.
4.   Improve Your Home Loan Eligibility
These days, NBFCs have simple eligibility conditions that anyone can fulfil to avail of a home loan with ease. However, if you have selected a lender with the best customer service and reasonable home loan interest rate, you must check their eligibility conditions and find different here. For instance, if you apply for a home loan from Clix Capital, you have to meet the following conditions:
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- You should be minimum 22 years at the time of loan application and maximum 65 years at the time of loan term-end
- You must be a salaried employee or a self-employed individual
- You should have an annual combined household income of above ₹ 3 lakhs
If you fall back on any of these conditions, take a resolution to improve your eligibility before applying for a home loan.
5.   Start Arranging the Documents
If you are eligible for a home loan from your selected lender, you must start arranging their required documents. For instance, when you apply for a home loan from Clix Capital, you need to show the following documents:
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- Completely filled online application form
- Passport-sized photograph
- Identity Proof- Aadhaar Card, Pan Card, or Government ID for government employees
- Address Proof- Aadhaar Card, passport, voter ID, driving license, or utility bills for the last 2 months
For salaried individuals:
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- Last 3 months’ salary slip
- Last 6 months’ bank statements showing salary credit
- The latest copy of Form 16
For self-employed individuals:
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- Business profile
- Last 6 months’ bank statements
- Last 2 years’ Income Tax returns & financials, including balance sheet, Profit and Loss accounts
While looking for a home and arranging the finances, start arranging these documents so that you can quickly show when your lender asks for them.
6.   Keep Credit Utilisation Ratio Low
You get a credit limit with your credit card, which you should not use it all. The higher the credit limit you use up, the higher will be your credit utilisation ratio. When the home loan providers check your credit score, a high credit utilisation ratio signifies that you largely depend on borrowed money to meet your expenses. As a result, they may assume that handling more credit will be difficult for you and reject your home loan application. To reduce your credit utilisation ratio, you must avoid using credit cards as far as possible and use a debit card or cash to pay for your purchases.
7.   Pay Off Your Existing Loans
While evaluating your home loan application, lenders look at your other financial obligations as well. If you are already indebted heavily, you will have a high DTI (debt-to-income) ratio that may pose you as a high-risk borrower. A high DTI ratio means that you may default on your EMI payments in the future. As a result, they may reject your loan application or charge you a high home loan interest rate than usual. Therefore, find possible ways to pay off your existing loans first, such as paying more than the minimum balance, creating a budget, transferring balance, consolidating debt, and increasing income.
8.   Take Time to Choose Your Dream Home
You must consider several factors while choosing your dream home. Your search for the right home should start much time before your home loan application. The property that you choose should be the right size for your family’s needs. It should be located in an easily accessible location with necessary facilities within a short distance.
These are a few resolutions you must take so that you can buy your dream home within the coming few years. When the time comes to take the extreme step, apply for a home loan from Clix Capital. We offer home loans of up to ₹ 2 Crore with a repayment tenure of up to 25 years. Take advantage of our competitive home loan interest rate to get your hands on the house you always dreamt of.
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You can also reach out to us at hello@clix.capital or call us at 1800 200 9898
