Consistent increase in the prices of houses and properties has propelled many to choose the HDFC home loan or home loan option through other lenders for meeting their dream of having their own home. However, HDFC home loan or various other lenders of home loan approve the application for home loan basis their credit risk assessment of the applicant basis their repayment capacity, income, credit score etc. Higher repayment tenures of as high as 30 years clubbed with big-ticket loan amounts also make it important for many applicants to prepare themselves financially before making such commitments.
Here, we will list crucial checkpoints that applicants should adopt when applying for HDFC home loans to avail better terms and conditions and lower HDFC home loan interest rates or lower home loan interest rates from other lenders:
Assess your credit report
All the home loan lenders, including HDFC home loan, consider a score of 750 and above to be good. Thus, those with such scores have increased HDFC home loan or home loan approval chances. Many of the home loan lenders prefer a score of 750 and above for approving the applicant's home loan application. Many lenders also provide applicants with a preferential interest rate if they have a good credit score of 750 and above. Thus, all home loan applicants should first assess their report before home loan application submission. Opting for this enables such applicants with a score of less than 750 to undertake the right steps to first improve their credit score and after this place an application for HDFC home loan or other lender home loan application on getting a good score.
Remember that home loan applicants can easily get access to their credit report by approaching the bureau's website. Alternatively, applicants may even consider visiting financial marketplaces online to avail credit reports with month on monthly updates.
Form a down payment corpus for a home loan
According to RBI, home loan lenders involving the HDFC home loan can finance up to 75 per cent to 90 per cent of home property value as a home loan. The final home loan proportion is fixed as per the lender's risk evaluation considering the applicant. The rest of the component needs to be contributed by the applicant's own pocket. Thus, the home loan applicant should look forward to accumulating nearly 10 to 25 per cent of the home property value before making the final home loan application submission.
Remember that making a higher contribution home loan amount in the form of a down payment can assist in bringing down your interest constituents. Choosing a higher home loan down payment contribution also increases your chances of getting your application for a home loan approved as it reduces the credit risk involved on the part of the applicant. However, during this process, applicants should not compromise on their emergency fund and crucial financial goals for making higher payments as down payments because doing this may force them to submit applications for expensive loans to face financial exigencies or fulfil their financial goals.
Strike comparison amongst lenders
Loan repayment tenures, processing charges, interest rates, LTV ratio, loan amount etc., provided by the HDFC home loan lenders or other home loan lenders can massively vary the basis of the applicant’s credit risk assessment. With various lenders involving HDFC home loan offering the home loan option, it definitely may not be an appropriate choice to visit each and every lender to compare amongst each one of them. One of the best ways to strike comparison is to approach online financial marketplaces for comparing amongst various lenders of home loan basis your credit score, monthly income, etc.
Assess your EMI affordability
Home loan lenders, including HDFC home loans, factor in the applicant's repayment capacity when assessing their application for a home loan. Usually, lenders require the applicant's repayment obligation on a monthly basis, including their new and existing loan EMIs to be within 50 to 60 % of their gross monthly or net monthly income. Those surpassing this set limit generally have lower home loan approval chances. Thus, make sure to contain your loan repayment obligation on a monthly basis to be within 50 to 60 % of your gross monthly or net monthly income before submitting your home loan application.
If you fail to contain your monthly repayment obligation to within 60 %, consider lowering it first before submitting your final HDFC home loan application or home loan application with another lender. You can contain the ratio by either prepaying or foreclosing your existing debts or by opting for higher loan repayment tenure. You may even contribute a higher down payment towards an HDFC home loan or other lender home loan for lowering your entire EMI outgo, which actually enhances your home loan approval chances.
Form adequate emergency fund
Financial exigencies like job loss, illness, accident etc., are unannounced in nature and result in income impairment. It even impairs your financial goal corpus as well as your EMI repayment capacity. Failure to pay your EMI by the due date not just results in massive penalties but even brings down your credit score. While one always holds the option of redeeming their investments towards their financial goals to repay their EMIs. Doing this might negatively impact your financial health. The best way to deal with such events is to create a sufficient backup called an emergency fund in the form of liquid instruments to witness your financial emergencies. This emergency backup should be nearly 6 months of your unavoidable monthly expenses, involving your existing EMIs and your new home loan EMI. Thus, the moment you think of opting for a home loan, try and, side by side, increase your emergency fund's size by almost 6 times your expected home loan's EMI. As emergencies strike any time, ensure to park your emergency fund back up in liquid financial instruments like savings accounts, fixed deposits etc.