Home Loan Tips for First Time Buyers
Owning a home of your dreams has become an easy reality thanks to home loans. However, applying for a home loan is easier said than done. Applying for home loan involves huge investments, tedious paperwork and long-term commitment. Besides, banks can be quick to reject your home loan application at the slightest of errors. Hence, you need to be cautious while applying for a home loan, especially if you are a first time home buyer. Here are some useful home loan tips for first time buyers that will ensure you have a smooth and stress-free home loan buying experience.
1. Check your CIBIL credit score
Your CIBIL/credit score is a critical factor in the loan approval process. You can check your credit score by filling up a form at the official website of the credit agency. You need to have a credit score above 700 in order to secure a good interest rate and quick loan approval. A low credit score may result in rejection of your home loan application. In addition, make sure that you pay your bills on time and avoid defaulting on any other loan or credit card payments to maintain a good credit record.
2. Get your documents in order
Getting all your documents in order is an essential step in every first-time homebuyer’s guide. Having the documents already assembled will help accelerate the processing of your loan application. For starters, you’ll need documents like proof of identification, proof of age, address proof, income documents and property documents.
3. Determine how much you can afford
It’s important to calculate the quantum of home loan you are eligible for before the application. This way, you can plan your home purchase budget in a better way. In case you end up applying for a home loan that’s beyond your budget, your application may be rejected or worse, you could end up defaulting. In order to determine your home loan eligibility, you need to consider factors such as payments towards existing debts, current monthly income from all sources etc. Alternatively, you can also use the Citibank home loan eligibility calculator to instantly get the estimate of the loan amount that you are eligible for.
4. Understand the different costs involved
Before getting a home loan, it’s very important to understand the different costs involved. Compare home loans, interest rates & other costs such as processing fees to determine which type of home loan offers the best values in terms of costs.
5. Know your options
Not all home loan options available in the market may be right for you. In order to choose the one that’s right for you, you need to understand the options available. Home loans are broadly divided into two categories based on their interest rates viz. semi-fixed rate and floating rate home loans. As the name suggests, a semi-fixed rate home loan carries a fixed interest rate for a specified period during your loan tenure, while the floating rate loan carries a floating interest that varies according to the market conditions. Each type of loan/mortgage has its own advantages and disadvantages; hence, you need to choose carefully.
6. Choose the home loan tenure carefully
Choosing a long tenure might feel like a temporary relief due to a lower EMI. However, in the long term, you will actually end up paying more interest by choosing a longer tenure. Hence, try to keep the loan tenure as short as possible, while ensuring that the EMI stays in a comfortable range. With the help of the Citi Home Loan EMI Calculator, you can check your indicative EMI. You can also see the repayment schedule basis the loan amount, interest rate and tenure as entered by you in the EMI Calculator for home loan.
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Whether you're a first-time buyer or looking to transfer your existing loan or leveraging your property's equity to expand your business, Citibank has different kinds of home loans that come with a host of benefits and competitive interest rates.
- Citi Home Loans - Easy Home Loans up to Rs 10 Crore at attractive interest rates with repayment tenure up to 25 years.
- Citi Loan against Property - Allows you to leverage your residential property's value by availing a loan against property.
- Citi Home Loan Takeover Plus Enhancement - Enjoy lower interest rates with our home loan balance transfer facility and then top up your loan to supplement further financial requirements.
- Top-up Existing Home Loan - Avail of the home loan top-up facility and get more money on the basis of your repayment record and the current property value.