Buying the home of your dreams is one of the biggest expenses you make in your lifetime. That is why most people apply for a home loan to fund its purchase instead of using up their savings. Purchasing a property with a loan rather than from savings has several advantages. For instance, it allows you to keep your savings intact, repay the loan in easy EMIs, and improve your credit score with regular repayments.
However, before applying for a home loan, here is a checklist that includes things you must keep in mind. These will not only increase your housing loan eligibility but also help you grab a loan with favourable terms and conditions.
1.   Check the Interest Rate
Just like any other loan, you must pay special attention to the interest rate applicable to your home loan. This is one of the most crucial factors determining your EMI amount and total loan cost. Although most lenders offer competitive interest rates on their home loans, they calculate it based on factors like your loan amount, credit score, loan tenure, DTI ratio, and others.
Different lenders may offer different interest rates on your home loan application. Therefore, you need to compare the quotes and find the loan offer with the lowest home loan interest rates. However, don’t forget to check the fees and charges, as they may also make a significant percentage of your total loan cost.
2.   Determine Your Loan Tenure
The repayment tenure you select for your home loan can make a big difference in your loan EMI affordability. The longer the loan tenure you choose, the smaller will be the EMI amount, but you may end up paying a high interest outgo. On the contrary, if you choose a shorter loan tenure, you may save big on the interest outgo, but the EMI amount will be higher, and you may find it difficult to afford them every month.
Most lenders have a home loan EMI calculator on their website, which you can use to find the loan term with the EMI amount you can easily afford. You must make a budget and select a loan term with EMIs according to your repayment capacity.
3.   Know the Subsidies
The Indian government aims at Housing for All by 2022. To make home-buying easier for the masses, they launched PMAY scheme in 2015, under which home loan borrowers can get subsidies on their interest rate to save money. Before applying for a home loan, find out if you are eligible for subsidies under the PMAY scheme and how you can avail them. Even a small subsidy can save a lot of money on your home loan and make home buying easier for you.
4.   Check Your Credit Score
A credit score is a 3-digit number that credit bureaus calculate based on your credit behaviour. For instance, you may get a high credit score if you are regular with your EMI payments, maintain different types of credit accounts, have an old credit history, and have a low DTI and credit utilisation ratio. When you apply for a home loan, lenders check your credit score to determine your creditworthiness. Therefore, you must check your credit score and ensure that it meets the lender’s minimum requirement before applying for a home loan.
5.   Ensure Eligibility
Home loan providers may have simplistic eligibility conditions that anyone can fulfil easily. However, some applicants may fall back due to a minor condition like age. That is why it is crucial to check the lender’s housing loan eligibility conditions before filling up the application form. For instance, you must fulfil the following conditions while applying for a home loan from Clix Capital:
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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 professional
- You should have an annual combined household income of above ₹ 3 lakhs
Applying for a home loan without checking the lender’s eligibility conditions may lead to loan rejection. This will not only waste your time but also reduce your credit score.
6.   Documentation Requirements
Most NBFCs these days have minimal documentation requirements that do not require several visits to the lender. However, you must check the lender’s documentation requirements and keep your documents ready while applying for a home loan. At Clix Capital, you need to apply for a home loan with 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
7.   Reduce Your DTI Ratio
Lenders check your other financial obligations while evaluating your home loan application. If you are already adjusting high loan amounts within your monthly budget, the lender may perceive you as a high-risk borrower and reject your loan application. Even if they approve, they may charge you a higher interest than usual. Therefore, you must try to pay off your existing loans and reduce your DTI ratio before applying for a home loan.
8.   Compare Lenders
Comparing lenders is one of the most crucial steps you must take before applying for a home loan. You must compare lenders based on several factors, including their loan amount, interest rate, repayment term, documentation requirements, eligibility conditions, customer service, and others. Find the one that best suits your budget and preferences and sign the deal with the most favourable one.
You will find hundreds of home loan providers in India. However, Clix Capital allows you to borrow a home loan of up to ₹ 2 Crore at the most competitive interest rates. If you fulfil our eligibility conditions and documentation requirements, you are good to go with your loan application process. Just keep this checklist in mind to improve your housing loan eligibility.
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You can also reach out to us at hello@clix.capital or call us at 1800 200 9898
