A home loan is a secured loan where the borrower has to pledge the property they are looking to purchase to the lender to obtain a large sum of financing. A home loan offers a low-interest rate and a long-term tenor, which helps with the affordability of a home loan. Before you apply for a home loan, here are a few things you must keep in mind as they can help with receiving a quick approval:
1. Your CIBIL rating is one of the most important factors you need to consider when applying for a home loan because the lender wants to ensure that the applicant is creditworthy. A high CIBIL score will ensure that you receive low-interest rates and other beneficial lending terms.
2. A lender will only sanction anywhere between 80% to 90% of your home loan, and the remaining 10% needs to be furnished by the borrower. You must ensure that you have a sufficient amount of savings to make the down payment. For example, if the property that you are looking to purchase is valued at Rs. 80 lakhs, the lender will finance only 80% of the property, which is Rs. 60 lakhs, and the remaining Rs. 20 lakhs will have to be paid by you as a down payment. Making an even higher down payment will help reduce your financial debt.
3. You can opt for a fixed interest rate where the rate of interest remains the same throughout the tenor of the loan, or you can opt for a floating interest rate where the rate of interest fluctuates based on the current market trend.
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