3 MinsJune 19, 2023
Applying for a home loan can be an exciting yet daunting task. To ensure a smooth experience and improve your chances of approval, it's essential to avoid common pitfalls during the application process.
Let's discuss three common home loan application mistakes and provide tips on how to prevent them.
(1) Mistake: Applying without checking your home loan eligibility
Before applying for a home loan, it is crucial to assess your home loan eligibility. Lenders consider factors like age, income, credit score, employment status, and existing financial obligations when determining your eligibility for a home loan. Failing to evaluate your eligibility beforehand may lead to rejection or delays in the approval process.
Solution: To avoid disappointment or delays in the approval process, use online home loan eligibility calculators to get an estimate of the loan amount you may be eligible for. This will help you set realistic expectations and make informed decisions about the properties you can afford.
Additionally, improve your credit score, maintain a stable job, and pay off existing debts to enhance your home loan eligibility.
(2) Mistake: Not planning for the property down payment
A down payment is a significant upfront expense when purchasing a home. Many homebuyers need to pay more attention to the amount needed for a down payment, which can cause financial strain and even derail their home-buying plans. Generally, lenders require a down payment of 10%–20% of the property's value.
- Start saving for your down payment well in advance.
- Assess your finances, determine how much you can afford to set aside each month, and create a savings plan.
- Consider investing in instruments like recurring or fixed deposits to help grow your savings faster.
- Research government schemes and incentives for first-time homebuyers that may help you save on your down payment.
Also Read: [ Can Home Loans be offered on the cost of the property?]
(3) Mistake: Overstating your repayment capacity
When applying for a home loan, it's crucial to be realistic about your repayment capacity. Overstating your ability to repay the loan can lead to financial distress and may even result in defaulting.
- Create a detailed monthly budget, considering all your income sources and expenses.
- Use a home loan EMI calculator to estimate your monthly repayments and assess if they are manageable within your budget.
- Consider factors like interest rate fluctuations and potential changes in your financial situation when determining your repayment capacity.
Choosing a loan tenure that allows you to comfortably repay the loan without compromising your financial stability is wise.
Choosing a reliable home loan provider: Axis Bank Home Loans
Axis Bank offers affordable and flexible home loans do bring you closer to your dream home. They cater to salaried and self-employed individuals, providing attractive rates and flexible tenures. Key features of Axis Bank home loans include:
- Minimum financing of ₹3 lakh
- Option to choose fixed or floating interest rates
- Loans available for both salaried and self-employed individuals
- Funding of up to 90% of the total property cost
- EMI waivers for schemes like Asha and Shubh Aarambh, depending on your repayment history
Home Loan EMI calculator is based on your requirements, such as tenure, loan amount, and interest rates, to give you an estimate of your EMI. With competitive Home Loan interest rates, extended loan tenures, and other benefits like EMI
Applying for a home loan can be complex, but being aware of common mistakes and avoiding them can make the journey smoother. Check your home loan eligibility, plan for your property down payment, and accurately assess your repayment capacity.
Keeping these points in mind can increase your chances of securing a home loan right for you.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.