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How to Prepare Yourself for a Home Loan

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Buying a home is a signi cant investment for most of us. Procurement of a home loan is as Magic Crate
important as selecting a property. In fact, for most of us, the decision of purchasing a property
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BankBazaar.com | Last Updated: September 08, 2014 12:36 (IST)
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Buying a home is a signi cant investment for most of us. Procurement of a home loan is as Special Mention For Neerja
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important as selecting a property. In fact, for most of us, the decision of purchasing a
property is based on the amount of home loan we can avail.

Getting a home loan might appear as a di cult task. However, by following a few useful tips DON'T MISS Promoted Links

given in this article, you can smoothly run through the complete process without any Bipasha Basu Reveals Life
hassles. This article will help investors - especially rst time home buyers - to know what Without Husband Karan Singh
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Applications The process of becoming home loan ready starts 6 months prior for those who never
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Here are a few simple steps which will help you bring nancial disciple in your life.
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Introduced On 1. Clean up your credit report
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The rst and foremost thing that all loan providers refer to before lending to you is your
7th Pay Commission: credit report. All lenders expect you to have a clean credit history with a good credit score
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of 650+. Make sure to check your CIR (credit information report) as well as your credit
Allowance, Other
Developments score online at least 6 months prior to applying for the loan. This will give you su cient
time to set your score right if there are any problems. This will also boost your con dence if XLRI's Leadership & Change
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you have a good credit score. You can buy your CIBIL TransUnion credit report (including Management Certification
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credit score) online for R470 only. XLRI
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Tip: Pay off all your delinquent accounts, late payments etc. and start making regular
payments for your credit cards and loan EMIs at least 6 months before availing a home Priyanka Chopra Vs Deepika
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2. Pay off existing debt

If you are have availed multiple loans, try to pay them off before you apply for a home loan. Why you need an investment
As having several loans might affect your loan eligibility, few banks, however, along with checklist?
your home loan, provide a scheme of debt consolidation as well. But this is subject to your Outlook Money
monthly income. As any other EMIs that you are paying right now, gets factored while
calculating your loan eligibility. The lesser EMIs you pay each month, more is your loan
eligibility based on your income.
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3. Improve your banking habits
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Whenever you apply for any loan, the bank account statement is one of the most important
documents that lenders ask for. Through your bank statement, the lenders verify your
banking habits, lifestyle - easily noticeable if you use your debit card frequently - and your Leftover iPad stocks worth $619
repayment behaviour. The lender expects you to have a good credit balance every month selling for under $40!

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How to Prepare Yourself for a Home Loan NDTV Profit http://profit.ndtv.com/news/your-money/article-how-to-prepare-yoursel...

(at least equivalent to the EMI that you will repay for your home loan). Please ensure that Madbid.com

there is no bouncing of cheques especially due to 'insu cient funds'. However, other
cheque rejection reasons like 'signature mismatch' are still acceptable as an exception. But
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such instances should not exceed twice in last 6 months to 1 year. Lenders generally ask
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for a bank statement of last 6 months if you are salaried and last 1 year if you are
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self-employed.

4. Keep your documents in place

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When you apply for a home loan, the following documents need to be submitted to the
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lender:
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Salaried Self-employed Self-employed
customer professional businessman
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Identity and residence proof
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Latest salary Education quali cation certi cates and
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statement of pro t/loss and
balance sheet Puravankara
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- Bank statement of last 6 months - 1 year
On the basis of above documents, the lender can offer in-principal approval for your loan
application. That is, the loan is sanctioned subject to positive property veri cation.
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In addition to the above documents, you need to submit copies of all property papers that
you desire to purchase. It is always recommended to verify the complete chain of property
documents available with the seller for at least last 13 years before entering into an
'agreement to buy'. Generally, banks do not process a loan application without the
'agreement to buy/ sell'. If you are not con dent on the property chain, it is always advisable
to consult a property lawyer well in advance. The lawyers analyse the chain of the property
and help you in making the decision to buy or reject the property. They also help in
execution of the sale/purchase transaction.

5. O ce and residential stability

Besides verifying your income, banking and property papers, lenders also verify your job and
residential stability at your current address. This is done to avoid the risk of a fraud or any
desertions later during repayment of loan. Hopping the job frequently might get you into
trouble while you apply for loan. Generally, a stability of at least 6 months is desired both at
residence as well as work place.

6. Apply for pre-approved loan

If you intend to buy a property within a couple of months, you can apply for a pre-approved
home loan with the bank. As mentioned above, most of the banks these days sanction a
loan amount that can be extended to you, even before you have zeroed in the right property
for you. As an extension to this service, many lenders like ICICI Bank and HDFC Ltd help
their customers nd their dream home. For instance, HDFC has started an online portal
wherein all the projects approved by HDFC have been listed. The borrowers can get their
loan pre-approved and can then start looking for a home. This also enables you to be more
precise with your budget for buying the property.

7. Understand lenders' loan process

Whenever you apply for a loan, be prepared for a lot of queries, phone calls and different
visitors walking in on behalf of the bank. Loan providers follow a process wherein they
outsource most of the veri cation process to third party vendors. After verifying their
identity cards, you can address their queries. Your loan application is processed and
approved/declined by the credit department of your lender that generally takes 4 to 8
working days to make a decision on your loan application. Once the loan is approved, then
your sales o cer guides you on further process of completing rest of the formalities.

8. Perform online research

As you get prepared for availing a home loan, do not forget to carry out an online research
on the best rates and schemes offered by different banks. There are different home loan
products available in the market as per different requirements. For example, some lenders
offer a product - home loan over-draft - that is best for those who wish to make
pre-payment of their loan. Although, the Reserve Bank (RBI) has mandated all the lenders to
waive off the pre-payment penalty charges. But still, having a home loan OD saves you from
the hassles of approaching the lender for pre-payment, standing in a queue, lling up form
and rest of the formalities. It is a unique product that gives you freedom to transfer surplus
funds to your home loan account online to save on the interest repayment. At the same
time, it also allows you to withdraw some funds from your home loan over-draft account.

Similarly, there are different home loan products offered by different lenders at various
rates. The key to grabbing the best deal is to do your homework in advance and become

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How to Prepare Yourself for a Home Loan NDTV Profit http://profit.ndtv.com/news/your-money/article-how-to-prepare-yoursel...

home loan ready.

BankBazaar.com is an online loan marketplace.

Disclaimer: All information in this article has been provided by BankBazaar.com and NDTV
Pro t is not responsible for the accuracy and completeness of the same.

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Story rst published on: September 08, 2014 12:36 (IST)

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