You have just got your first job in a reputed Company. Offer letter in hand, you rush home to show it to your parents. The offer letter is the first sign that you are truly independent. You want to show off your independence. Is there a better way than buying your own home?
You need to avail a home loan from a bank to buy your dream home. You have just started working after all and you cannot afford the money to buy a house. Now comes the big question… Is the decision to avail a home loan the right one?
You avail a car loan. You have a tenure of 5-7 years to repay the loan. You avail a personal loan. You have around 1-5 years to repay the loan. What about the home loan? The home loan gives you a tenure of 20-30 years, to repay the loan. It is a long term commitment.
You need to have a stable job and regular income to pay back the home loan. This is your first job. You have just started working and banks are not too sure, how you would do in your career. Working in a reputed Company is a good start, but banks are still not sure of the stability of your job. You need to be sure you have the capabilities and skills to survive and excel in your job. You need to be employed even in a recession.
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You need regular income and a stable job to avail a home loan. Banks give you a tenure of 20-30 years to repay the home loan. Banks expect you to have a good career and not just a good job. Banks are afraid that you might quit your job and go for higher studies. Who would repay the home loan?
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You don’t have a credit score. Is this a good thing? No, definitely not. Banks are very careful before they sanction a home loan. Banks want to know everything possible about you, before they give you a home loan. If you do not have any credit history, banks do not know anything about you. How can they sanction your home loan?
You must build a credit history before you apply for a home loan. You must avail a credit card and make sure to repay the borrowed amounts, within the billing cycle. You get 30 days and an additional 25 days called the grace period, within which you must repay the amount you have borrowed, using your credit card. This is the billing cycle. This helps you to build credit history, along with a good credit score. Now you can confidently apply for a home loan, even if it is your first job.
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A car costs a few lakhs of rupees. You can easily avail a car loan to purchase your car. You avail a personal loan for a few thousands or a few lakhs of rupees. What about a home loan? Your home costs several lakhs of rupees and if your home in is a metro city, maybe even a crore.
Banks would be very careful while lending such huge amounts. You need to have all points in your favor if you want your home loan sanctioned, especially if it is your first job. You need a co-applicant (guarantor) such as your father or an earning parent, to guarantee the home loan. If you have a professional degree such as a CA (chartered accountancy qualification) or even a teaching degree, then even if you are unemployed (lose your job in a recession), you can earn money by giving financial advice or tuitions.
So be strong. This is your first job and your first home loan. Your dream home awaits….
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