You want to own your dream home. You have searched and searched and finally found a beautiful apartment, which you want to call home. This could finally be the year in which you could step into your own home. You earn a good salary. Bank interest rates on home loans are coming down. Now the big question. Are you ready for a home loan?
Before a bank sanctions your home loan, it checks your cibil score. Whenever you borrow (take a loan) from a bank or avail a credit card, the bank sends a monthly report of your repayments (EMI’s paid back) on your loans, to CIBIL. This information is used to create a report called CIR (Credit Information Report). Based on this report, CIBIL assigns you a score between 300 to 900 called the CIBIL TransUnion Score. You need to have a good cibil score of around 700 to 750, to get your home loan sanctioned.
You must obtain your credit Information report from Cibil, a few months before you apply for a home loan. If you have a low cibil score, you can even improve your Cibil score, before applying for a home loan.
You want to avail a home loan from a bank. You need to understand that the bank will not sanction you a home loan, for the entire cost of your home. The bank will sanction about 80- 90% of the value of your home. You have to arrange the remaining amount yourself. You have to make the down payment on the apartment (about 10-20% of the cost of the apartment), to the builder from your own money. The bank would sanction the rest of the home loan amount.
The big question….Can you afford the down payment on your apartment? You might have to save money for the down payment on the apartment. If you cannot afford the down payment, you need to borrow this amount from friends or relatives.
Have you availed a personal loan or borrowed on your credit card? Pay back your personal loan and repay all credit card dues, before applying for a home loan. Be sure, your bank will check to see, if you have any loans to repay. If you have availed too many loans, the bank believes you would struggle to repay your home loan. The bank would not want to risk, you not paying back the home loan.
Your dream apartment costs a lot of money. Your home loan matches most of this cost. Your home loan could be as high as INR 50 Lakhs or even INR 75 Lakhs. The bank gives you a 15 to 20 year tenure, to enable you to repay such a huge amount. This makes your home Loan, a long term commitment.
The big question…. Can you afford to pay the home loan EMI’s in time, for several years. It is not rocket science to know that you require a good monthly income, to pay the home loan EMI's in time. You need to have a good steady job or a regular source of income, to pay back your home loan in time.
If you feel you can match all these requirements, then go ahead and avail a home loan. Your dream home is not far from you.
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