We all desire for a space to be called our own, a home, surrounded by love, care and laughter of our dear ones. Since time immemorial, considered as one of the basic necessities of human life along with food and clothing, home symbolises the domestication of human beings and other organisms alike. So, being such ingrained into our human nature, even today, the very next step after we have entered into a phase of life where we have a stable income source, is to start planning to buy a house - the earlier the better!
Buying a house is one of the biggest investments for many of us and as expert’s advice; one should always prepare well and educate oneself before venturing out. Some of the questions that predominantly need to be addressed are: Whether we want to settle in this neighbourhood? Whether we will be here for minimum 4-5 years, what are the prospects of letting/renting out if we decide to move out from here? How much built-up area do we actually need now as well as in future (More is not always good, sometimes it may come down to a one more bedroom to vacuum and clean and a bigger lawn to mow)? What are the chances of appreciation/ depreciation of real estate in the area? After satisfying oneself of the aforesaid, I think now is the time to make the big leap.
Once you've made the big decision of forging ahead, next giant step is to explore the finance options. This means either you have enough for an outright cash purchase or as majority of the population would do, is to borrow money to buy a home. Nearly all banks and some financial institutions provide housing/home loans. If you feel daunted by the thought of going through the application process, I can totally understand, ‘cause you know, been there done that!
Here are few tips which will help with smooth processing of Housing/Home loan.
1. Proper Identity documents.
Countries over the world have their own policy of Know Your Customer/ Know your Client and own set of documents identified for the same. Although everyone who is an account holder in any Bank should have already complied with the KYC guidelines, still one may check out the proper identity documents and information like Social security numbers, Aadhar no. etc.
2. Awareness about your credit score:
Credit Score is the second most important eligibility criteria for availing a housing loan. Credit score is a three-digit figure mostly ranging from 300-850 which is calculated from the past credit history of an individual and generally helps the lender in determining the chances of repayment of credit obligations. The higher the credit score (mostly above 700), the more one is eligible for credit. Currently, one has the option of finding out their credit score online through different platforms and depending on it may work out towards improvement of the same.
3. Legal compliance:
This step is considered to be strenuous and if one is not having proper awareness about the rules and laws governing the real estate and local land laws, consider obtaining the help of professionals for it. The most basic facts to check out are whether the property has been mutated in the name of the seller, whether requisite statutory permissions like building permission, relevant departments like municipality, electricity board etc. has been obtained, these are some of the necessary legal requirements which need to be verified.
4. Who is eligible for Housing loan?
i) All salaried employees and self-employed individuals and professionals are eligible for Housing loan. Some Banks may emphasise for minimum period of service or being a self-employed, a factor.
ii) The next eligibility factor is the age of the applicant. This criterion too varies from bank to bank but generally it ranges from 21 yrs. to 60 yrs. and the repayment tenure mostly depends on this factor. Earlier the home loan is availed, longer will be repayment tenure (sometimes the maximum repayment tenure extending to 30 yrs.)
5. How much credit can be availed?
The quantum of loan varies depending upon the salary and income of the individual. Generally, it maybe 60- 72 months last drawn salary or 5-6 years annual income in case of non-salaried individuals. Further this factor also dependent upon the Net Take Home of the individual after adjusting all the EMIs including existing EMIs and the proposed Home loan EMI. It too may vary and generally ranges from 25% to 40%.
6. Paying your share or paying the margin money/deposit.
Mostly all banks emphasise for payment of the margin money which may be a certain percentage of the Apartment or the project cost. It may vary too from 10% to above depending upon the cost of the project and quantum of the loan availed.
Investment of any kind should be for happiness and pleasure. And like I said investing in a home being a major investment, the more aware while investing we are, the more will be our returns, be it in the tangible form of monetary benefit or in the intangible form of happiness and bliss. So, choose wisely and invest prudently.