Want a home loan? Here's why 'pre-approval' matters
What's the story
Dreaming of owning your own home? Getting pre-approved for a home loan in India is the first big step to making that dream a reality.
Not only does it give you a clear picture of how much you can borrow, but it also boosts your credibility as a serious buyer. Ready to dive in and understand how this works?
Let's break down the home loan pre-approval process, and set you on the path to securing that perfect property!
Credit score
Understand your credit score
Your credit score is crucial when it comes to home loan pre-approval.
Lenders rely on it to evaluate your creditworthiness and determine the loan amount, interest rate, and terms.
A score above 750 is deemed good, making pre-approval more likely.
Always check your score before applying, and if needed, work on improving it by paying down existing debts or rectifying any mistakes in your credit report.
Documentation
Gather necessary documentation
To fast-track your home loan pre-approval, Indian lenders need a complete set of documents.
This encompasses identity proof, address proof, and income proof (including your last three months' salary slips).
Plus, you'll need to provide bank statements from the previous six months and any relevant property documents.
Having these docs ready to go will seriously turbocharge your loan application process.
Budgeting
Know your budget
Before applying for pre-approval, you should know how much you can comfortably afford to borrow without stretching your budget too thin.
Take into account your monthly income, any current debts, and your personal expenses.
Utilize online EMI calculators to gauge what an easily manageable monthly EMI for you would be.
This will assist you in identifying a suitable loan amount that won't put unnecessary financial strain on you.
Comparison
Compare lender offers
In India, there is a significant disparity in interest rates and terms offered by lenders. Hence, it's crucial to compare options from several banks and housing finance companies before making a decision.
Don't just focus on interest rates; consider processing fees, loan tenure options, prepayment penalties, and customer service quality.
By doing this comprehensive comparison, you can select an option that best fits your financial circumstances.
Extra costs
Factor in additional costs
The total cost of purchasing a home is not limited to the purchase price; there are other expenses involved, including stamp duty, registration fees, GST (for under-construction properties), legal fees, and brokerage (if applicable).
Make sure to include these costs in your budget when determining the amount of money you require from the home loan.