Home Loan Tips For First Time Buyers

Buying a home can be a nerve-wracking experience for many. The reason is that there are hundreds of things that needs to be taken care of before one can finally buy a home! Applying for a home loan is one of the most common ways of home financing and this is where it all gets trickier for most people! If you're in the same place, this blog is going to be very useful for you! Here are the top home loan tips for first time buyers that'll prevent you from landing yourself in a soup! These tips are especially useful for first time home loan borrowers in India. Let's get started!

1) Plan on how much amount of loan is affordable for you:

You might be totally in love with that luxurious 2 BHK villa close to the heart of the city, but you need to consider your affordability to pay the monthly loan EMI. You might end up paying 80% of your total monthly income just for the loan EMI and this will leave you with a shoe string budget to manage other expenses. Ideally, whatever you pay for the loan EMI must constitute less than 50% of your total monthly income. Most of the banks consider this factor too but private money lenders might lend you more than that leaving you in an ocean of debt! Thus, the first step would be to plan how much loan is affordable for you.

2) Raise your down payment:

Banks usually provide only 80% of the total property value as loan. This means that the rest must be raised by you as down payment. The next step would be gather the amount of down payment. This may be through savings or hand loans. Ensure that you arrange for down payment first before you apply for the loan.

3) Get your basics about loans right

Getting the basics right becomes important especially if you're a first time home loan buyer. Do your homework before approaching your bank. Know how much time banks would take for processing your loan, what are the documents you'd be required to submit to banks, how the banks will run a legal scrutiny and so on. This way you'll be prepared well in advance for the things you'd be required to do which will save you good amount of time and unnecessary trouble and delays.

4) Maintaining a good credit score:

Banks always look at the credit score before approving your loan. You can check your credit score through various online platforms and ensure that you'll get your loan approval. A credit score above 700 is excellent and banks would be more than willing to approve your loan. But it'll be very troublesome if your credit score is less than 500. Cracking your head over gathering of documents and wasting time in the banks makes no sense when you already know beforehand that your credit score is low.

5) Compare different banks to get best rates!

At the end of the day, loans are all about numbers and lessening your costs in the process of loan borrowing should always be on your cards. Compare the rates offered by different banks in order to get the best rates. Doing a little homework on the tie-ups builders have with certain banks which might waive you off a good percentage of interest is always beneficial!

6) Fixed rates V/S Floating rates:

Many people might advice first time home loan buyers to opt for fixed rates loans. But that's not always the best option for anyone. If you settle down for fixed rates, it means that you'll be paying the same rate of interest throughout the tenure of the loan. On the other hand, floating rates varies according to the market. So opting for fixed rate loans might not allow you to enjoy the low rates when the market's down.

7) Claim your tax benefits:

First time home loan buyers can always claim the maximum tax benefits on their first home loan. Do your research about such tax benefits and ensure that you get the best deal for yourself!

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Hope you found this article on home loan tips for first time buyers helpful. Feel free to share your thoughts in the comments section below.