If you have been looking to buy that neat apartment for a while now, this could not be a better time! What with the rising popularity of easy home loans and not to forget the tax benefits that come with it. Owning a house is a much better option because:
a) You can own an exclusive place for you and your family and not worry about rental issues
b) The value of real estate is always appreciating, so that your house will serve as a good form of investment.
Instead of paying the tiresome rent every month, why not pay a convenient emi and own your house in the process? The one question in your mind must be; How to apply for home loan? Of course there are a number of other factors you would need to take into consideration when you are a first time buyer.
1) Your income – Is it regular? Will you be able to have a constant source of income for the next 20 years or more? Basically, you should earn for as long as your loan duration. The simple reason being- in order to repay your loan, you will be paying a monthly emi which will be a portion of your monthly income. This is the basis on which you will calculate your home loan.
2) How much down payment should you contribute? – It is not enough if keep learning; you should also have sufficient savings to be able to pay your down payment. I'm sure your next question is: What is down payment? It is your contribution towards purchasing your home. No bank will provide more than 80% of the value of your property. This means that the remaining 20% needs to be arranged by the buyer – this is where having sufficient balance in the bank will be of great help. Ensure that you do not use up all of your savings, just for your down payment.
3) Can you afford your emi? – When a bank receives a loan application, one of the main criteria is the applicant's income. It is the view of the bank that even after paying the emi; the applicant has to have enough of his income left to meet the family's living expenses. Typically, not more than 60% of your net monthly income should be paid towards your monthly obligations (credit cards, loans etc). But, ideally it should be between 30 to 40% of your monthly income.
4) Be aware of additional expenses – Apart from purchasing your home, do not forget to consider the cost of furnishing, interior decoration, accessories and fittings, monthly maintenance and so on.
5) Legalities – Ensure that all the documents relating to your building / individual house is in order. Some of these documents include: title deeds, sale agreements, and encumbrance certificates.
This should be a sufficient checklist to start off with; you will get more insight once you are able to answer the basic questions clearly.