Owning a home is a dream for many, and for most people, it involves taking a home loan to make that dream a reality. With digital advancements, applying for an instant home loan online has become faster and more accessible. Various financial institutions now offer online instant home loans through mobile banking applications, with less waiting time and paperwork. Before applying, there are certain key points that you should keep in mind to achieve long-term financial security. This article explains various pointers that must be considered while applying for an instant home loan.
Check Your Loan Eligibility
Every lender will have their eligibility criteria. These would include your age, employment, monthly income, credit history, and outstanding loan commitments. Even if an instant home loan online application provides speedy approval, your loan may still be rejected if you fail to meet the eligibility criteria. Using a home loan eligibility calculator may assist you in getting a better understanding of how much loan amount you may qualify for. This will further help you plan your repayment structure.
Understand the Type of Interest Rate
Interest rate is an important feature of a home loan. It affects the amount you pay each month, as well as how much the loan will cost. There are two kinds of interest rates:
- Fixed Rate: Interest is constant over the entire loan duration. A fixed rate can provide predictability in EMI amounts.
- Floating Rate: The rate of interest varies based on the market conditions. Your EMI can be increased or decreased over time.
You can choose a type of interest depending on your risk tolerance and budget. Research into interest rates offered by various lenders to get a suitable offer.
Estimate the Total Cost of the Loan
Individuals generally take into account the interest and the principal while availing a home loan. However, several other charges add up to the cost, such as:
- Processing fees.
- Legal and technical assessment charges.
- Stamp duty and registration charges.
- Foreclosure or part-payment charges.
Other lenders can also add the home loan insurance to the loan. You can request explicit details of all the fees and determine the total amount to be paid throughout the loan period.
Check Your Payment Capacity
Before availing a loan, review your monthly budget. Home loans usually have a 15 to 30-year repayment period, and therefore, long-term planning is necessary. Ensure that your monthly EMI is comfortably within your income, and you have funds left for spending on miscellaneous things and savings. You can try out different scenarios using online EMI calculators and come up with a repayment schedule that works for you.
Monitor Your Credit Score
Your payment history and credit behaviour determine your credit score. Lenders use this score to decide whether you’re a reliable borrower. If your credit score is 750 and above, you may have a higher chance of being approved, and you can even get a lower interest rate. If your ratings are not up to the required standards, you could try to pay off debt or pay outstanding bills.
Choose the Right Tenure
The loan term affects your EMI as well as the interest incurred. Longer term means lower EMI but increased total interest paid. Shorter term means higher EMIs but reduced total interest. Balance it considering your financial capability.
Read the Terms and Conditions
Even after immediate approval, the loan agreement must be carefully read. This agreement outlines all the conditions, such as:
- Repayment conditions
- Interest rate policy
- Prepayment terms
- Penalty clauses
Understanding these terms is essential. Ask the lender to explain anything you don’t understand. Do not sign the document in a hurry, even if it is an online application. Knowing the terms in detail can save you from unwanted future issues.
Keep All Required Documents Ready
Although online applications may have less paperwork, there is some minimum documentation involved. The sooner you can have these documents ready, the sooner the lenders can process your application. Therefore, you must have the following documents scanned.
- Identity and address verification
- Proof of income, such as a salary slip or bank statements
- Property-related documents
Preparation can simplify the application process, especially when applying through an instant home loan app.
Conclusion
Online submission of an instant home loan application can be simple and swift, but it is still a major financial commitment. To make a well-informed decision, you must consider various parameters such as financial eligibility, rate of interest, repayment ability, and total loan cost. Take time to understand all aspects of the loan. This will allow you to select a loan that will not only help you meet your immediate financial needs but can also support your long-term financial well-being.