Whether you are looking forward to buying property for investment purposes or you want to find your own dream home, it is one of the biggest financial decisions you can make in your life. You can apply for an online home loan if you are short on cash or if you don’t want to liquidate your savings.
An online home loan is a great form of financial assistance provided by banks and non-banking financial companies. You can make your dream of purchasing your home a reality with lower interest rates and the option to choose the repayment tenure based on your convenience and requirements.
However, availing of an online home is not so easy if you are unaware of formalities and factors such as interest rate, credit score, fees related to documentation, and more.
Here is the list of everything you must know before availing of an online home loan
1. Research on Available Options
There are a plethora of options on the internet, conduct thorough research on the options available in the market before applying for an online home loan. Your research should contain the lender, down payment, EMIs payable, and repayment tenure. Your research findings enable you to choose a lender that offers attractive interest rates and longer repayment tenure. Make you explore all your options and then decide for yourself.
2. Assess your Affordability
Before rushing to apply for an online home loan, you must assess your needs and financial capacity to determine whether you can afford the fixed monthly EMIs without compromising your finances. You must consider the overhead expenses beyond the EMI you choose to pay every month and maintain a stable income outflow to meet contingencies. Follow a strict budget and spend cautiously.
After assessing your affordability to repay the loan amount, you must factor in your monthly expenditure. Once you receive the loan amount, you have the responsibility to make repayments every month. So, you have to follow a strict budget and spend cautiously to meet your equated monthly installments. Also, make sure to be regular with your payments to build credibility and avoid an increased interest rate.
3. Choose Suitable Equated Monthly Installments (EMIs)
Your EMI amount depends on the down payment you make at the time of making a home purchase. If you submit a large amount as a down payment, you will have a lesser outstanding amount to be converted into EMIs. Furthermore, an EMI amount exceeding more than 45% of your total income is not favorable.
4. Loan tenure
A home loan tenure is a time you take in paying off the amount with interest. If you opt for a longer repayment tenure, you will get small EMI amounts to pay. However, a longer loan tenure also results in increased interest rates and vice versa. So, choose your repayment tenure based on your income flow.
5. Maintain a Better CIBIL score
A CIBIL credit score is one of the essential factors lenders consider to approve your home loan application. Making regular payments of the loan amount improves your credit score. If your CIBIL score is more than 750 points, you are eligible to apply for an online home loan and can even extract better interest rates with longer repayment tenure.
6. Be aware of the foreclosure norms
The Reserve Bank of India’s norms keep changing, and keeping an eye on those changes may benefit you on many levels. You can avoid paying added expenses if you foreclose your home loan by repaying the outstanding amount before the committed time. Also, it reflects positively on your credit score if your loan is paid sooner.
7. Check the Eligibility Criteria
Every bank or NBFC has different eligibility requirements. You will need to visit your chosen lender’s web portal to check their eligibility criteria and ensure that you meet their requirements.
8. Communicate on additional charge
Some lenders levy administrative, processing, or service charges on borrowers at the time of online loan applications. Before applying to avail of your home loan, communicate with your lender about these additional charges. Check whether they are one-time charges or they have to be paid on monthly basis.
9. Carefully Read the Documents
Carefully read the agreement documents provided by your lender to have extensive knowledge of your online home loan application. Most lenders usually assist in reading the necessary documents before signing the loan papers.
An online home loan is the best way to achieve your goal of owning a property. However, you must conduct your research in advance and know everything to avoid mistakes in your application.
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