When should you apply for the home loan? Is it the right time to buy a new home using the home loan? Should you wait for some months or go-ahead for it now?
These are some common questions that throng the mind of people looking to buy a home using housing finance.
Prospective borrowers not considering the right time to apply for the loan may have to deal with higher current home loan interest rates. Also, availing the home loan at the wrong time may hurt their overall finances.
If you are facing issues in deciding if it is the right time or not to apply for the home loan, then you can count on some factors. Considering them can help you decide the right time for availing the housing loan. Let’s check them out!
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When the current home loan interest rates are lower
India and many other countries are facing extreme COVID-19 times. It is also the time when the home loan rates have gone down. It is to encourage more borrowers to apply for it and fund their dream homes. Hence, if you were looking to get a discount on the current home loan interest rates, then it may be the best time for you. This way, you can easily pay reduced EMIs and avoid extra interest charges. The final offered home loan interest rates will also depend on your cibil score, repayment and income record, and more.
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When you are earning a good monthly income
Many people don’t go for a home loan considering it as a long-term commitment. But if your income is good, then it means that you can manage to repay the loan on time. If you are already earning a good income, then you can always opt for a shorter tenure and save big on home loan rates. It may increase the EMI amount, but you can reduce it by making time to time prepayments during the tenure. You can also use the home loan EMI calculator and know the payable EMI amount beforehand. This way, you can know if your income can support the EMIs + other obligations.
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When you have a reasonably longer work experience
Having continuous work experience is one of the key eligibility parameters that lenders look at while sanctioning the loan. When lenders are aware that you are working for a long, then they may be convinced that you can repay the loan on time. Hence, they may reward such borrowers with a lower home loan interest rate. If you are employed with a company for 3 years and more, then you may be confident to apply for the loan. On the other hand, if a borrower has just started the career and wants to avail of the home loan, then the lender may not be convinced to give the approval. Also, when you are young in your profession, then it may not be advised to get liability on your head. It is because the housing loan is a long commitment.
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When you get the right property to buy
Another factor that may help you decide if it is the right time to apply for the housing loan or not is the availability of the right property. If you are able to get your hands on the exact property that you were looking for, then it may be the right time to get the loan. You should check if the property that you wish to buy is worthy of applying for the home loan or not. If the property that you wish to buy is well within the repayment capacity, then you can apply for the home loan. To avail of the best home loan deals, you can always compare all offers on a third-party website. This way, you can pick an offer that suits your budget and needs the best.
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When you have saved enough for the down payment
Lenders will sanction up to 80-85% of the value of the property that you want to buy. The remaining needs to be arranged by you only. Thus, if you have saved enough to make way for the down payment, then it may be the right time to avail of the home loan. The higher is your down payment figure; the lower will be the current home loan interest rates that you have to deal with. Your outstanding amount will also decrease, and the cost of the debt will also fall.
By considering these crucial factors, you can easily decide if it is the right time for you to apply for the home loan or not.
