When buying a home, people tend to take out a loan to ease the financial burden. The amount of the loan can vary according to the needs of an individual. When the loan amount is big, paying it back can be slightly difficult without proper financial planning.
Although a home loan of up to Rs. 20 lakh is a significant amount, here is a detailed insight into what applicants can do to reduce the loan repayment burden.
5 Tips to reduce home loan burden
When applying for a significant loan amount, candidates must keep in mind certain things that will make it easier for them to pay back a big loan with ease.
Here are the top 5 things to consider:
1. Make a higher down payment
When a person makes a higher down payment on a loan, it reduces the remaining loan amount to be repaid. This also ensures an overall low-interest amount and less EMI which makes it easier for people to repay a higher home loan amount.
2. Choose a shorter loan tenor
Lending institutions offer a long tenor of up to 30 years on a home loan. Choosing a longer term for the loan also means low monthly EMI. However, this is a temporary solution since people end up paying an overall higher amount of interest on a loan with a long tenor.
Choosing a shorter tenor will help borrowers to pay more toward the principal amount of the loan and less towards the interest.
3. Try to maintain a high credit score
Lenders check borrowers CIBIL score for home loan approval and determine the rate of interest based on that. Having a credit score of 750 or higher is considered ideal which will fetch competitive interest rates from lenders. This will lower the overall loan repayment amount.
4. Make prepayments if possible
Using any extra money to pay back the loan mount before the completion of the tenor will help applicants to be free from the interest burden. Most lenders offer the feature of part and full prepayment of the loans opted at floating interest rates at no additional charges.
5. Opt for a balance transfer
In case borrowers find a loan provider who provides lower interest rates on home loans, they can transfer their existing loan balance to that lender. This is called a home loan balance transfer which will reduce the overall loan amount and make it easier to repay.
However, before making the shift, applicants should inquire about any additional charges related to the balance transfer procedure.
For getting approval for a home loan applicants must meet certain eligibility criteria.
Home loan eligibility criteria
Lenders specify certain parameters for salaried and self-employed individuals for getting a home loan. Fulfilling these criteria facilitates smooth disbursal of the loan.
- Business continuity of 5 years minimum
- Age between 25-70 years
- Residing Indian citizen
- 3 years of working experience in a private/public organisation or MNC
- Residing citizen of India
- Between 23-62 years of age
The upper age limit is the applicant’s age at the time of loan maturity.
After ensuring they meet the home loan eligibility criteria, applicants can apply for the home loan upto 20 lakh in a few simple steps.
Home loan application process
Here is a step-by-step process for applicants wondering how to apply for a home loan.
Step 1: Visit the website of your preferred loan provider.
Step 2: Open the ‘Home Loan’ application form.
Step 3: Enter details, such as name, contact number, income, and employment details, required loan amount, etc.
Step 4: Verify the OTP to complete the application process.
Before applying for the loan, prospective borrowers must check their eligibility, EMI, and overall interest on their preferred loan amount. Lenders provide tools, such as eligibility calculators and home loan EMI calculators on their websites for free. These tools are fast, and accurate and eliminate the hassle of manual calculations.
Besides, candidates can avail of customised pre-approved offers on home and property loans that lenders in India provide. These offers make the process of loan disbursal prompt and smooth. Borrowers can check these pre-approved loan offers by visiting their preferred lender’s online portal.
A home loan of up to 20 lakh is easy to acquire considering, lenders provide loans of up to Rs. 5 crore to eligible candidates. Following certain simple steps will make the repayment process equally streamlined without putting any financial pressure on borrowers.