For many people, owning a home is still a pipe dream. Others realize their aspirations by using a house loan to purchase their dream homes. But when is the best time in India to apply for a home loan? The interest rate, your income levels, your age, and your CIBIL score are all considerations to consider. Knowing your income levels will help you evaluate your repayment capacity, making it easier for you to repay the loan. Making it simple for you to choose the best time to apply for a home loan.
How to Get Low Interest Rate on your Home Loan
Getting a mortgage is a difficult task. In India, interest rates are decided by a variety of factors such as your income, age, employment status, and credit score. Banks determine interest rates based on these factors. Aside from these considerations, the term of your loan has a considerable impact on the interest rate you pay on your house loan. However, there are a few strategies you can employ to get the greatest house loan interest rate in India. Some recommendations for achieving the best interest rate are as follows:
- Down Payments: Putting down a large down payment on a home implies borrowing a smaller amount of money for a mortgage. As a result, as the loan balance decreases, so does the amount of interest you pay on the loan.
- A shorter loan period: Choosing a shorter loan term will drastically reduce your interest rate. You should, however, always use a house loan EMI calculator to determine the best loan term for you.
- Evaluate before applying: Before applying for a home loan, evaluate the many banks and their interest rates to find the best home loan interest rate in India.
- Making Pre-Payments: Whether in full or in installments, making pre-payments on your loans decreases your interest rates. As a result, you should make prepayments if you have spare cash (such as a bonus from work).
Application Process
The housing loan application process is divided into eight steps:
1. Fill out the application for a House Loan
Every applicant must complete an application for a house loan. Name, residence, income details and verification, employment details, education details, and phone number will all be included. If the applicant is a paid employee, he must also provide proof of all of the above, as well as salary slips for the last three months, employment proof, bank statements for the last six months, and the most recent Form 16. Self-employed applicants must submit a complete set of ITR returns for the last two years, as well as other income documentation.
2. Make a payment for the Processing Fee
Following the submission of the documents, the applicant must pay a non-refundable processing charge to the bank. The bank’s preliminary efforts in validating borrower information and analyzing the property’s valuation and ownership title are covered by this cost. The remaining processing fee is collected at the point of distribution. The cost varies depending on the bank. It could be a fixed amount or a percentage of the loan’s total amount.
3. Bank Discussion
Within 5 working days, the bank will decide whether to approve or reject the house loan application based on their credit policy. The bank may contact the candidate for a phone interview. This is true for the vast majority of paid people. In the case of self-employed borrowers, a bank representative may pay a personal visit to the customer’s place of business to discuss the situation and gain a better understanding of their business.
4. Document Verification
After the bank has finished speaking with the applicant in person, it will begin assessing his eligibility. This may entail a bank officer visiting his current address and/or contacting his employment. The applicant’s CIBIL score will be checked by the bank. Moreover, it is advisable that if you have a low CIBIL score, then you should follow the steps on how to improve CIBIL score before applying. Also, the applicant’s documents will also be verified by the bank.
5. Approval Process
This is the process by which the bank determines whether or not to approve the loan application. The applicant must ensure that all of his documents are in order, or his application may be denied.
6. Loan Sanction Letter
If the loan is approved, the bank will give the applicant a loan sanction letter. The acceptable loan amount, interest rate and type (fixed or variable) applicable, loan tenure, and all other terms and conditions will be included in this letter.
7. Property Verification
The bank will verify the property now that the loan has been approved. It will conduct a legal examination of the property to ensure that the title is clear and that there are no indicators of conflict or dispute. It will also inspect the stage, progress, and quality of building if the property is under construction. If the property is a resale, the bank will examine the building’s age, quality, and upkeep levels. It will also see if the house has previously been mortgaged. The bank will require the applicant to produce all of the property’s original documentation, including original copies of the title deed. Until the applicant fully repays the loan, these papers are mortgaged with the bank.
8. Loan Disbursement
After the property verification is completed, the customer must present the bank with all original documents. The loan will be disbursed and the check will be handed over to the borrower if all of the documentation is in order. If you are buying a home from a builder, the check should be made payable to the builder. The bank will give the customer a welcome kit together with the payback plan after the funds have been disbursed.
