Things to consider before applying for a home loan

Buying a home is a huge decision and there is a lot to learn before you start shopping for your dream home.  Being prepared for what’s to come will help make the process easy and painless.

The recent increase in focus on the affordable housing segment, a lot of positivity is noted in today’s anxious population who had resorted to rented space as the only solution. This, in turn, has spurred growth in the housing finance sector for financing the home. Comparing and understanding home loans is a tedious job and like any other financial product it is important for a home loan buyer to be abreast on the processes and intricacies of the legal and other practical aspects to avoid any surprises.

Below are some simple tips / factors that one needs to take into consideration before applying for a home loan:

  1. Eligibility:
    Before opting for a home loan one must assess his / her current financial liquidity and arrive at an estimated amount on how much one can comfortably afford. The loan amount should be able to derive a specific monthly instalment and repayment amount. One should take into consideration any changes that might affect your future income patterns, interest rates fluctuations and the type of lifestyle.
    Try to close any other loans which are active as they might reduce the eligibility factor while applying for a loan. Banks generally give loans up to 80 percent of the total property cost and this can fluctuate as per the eligibility of the home loan applicant. Assessing your need is a crucial step while applying for a home loan and one needs to do his / her due-diligence before taking it further.
  2. CIBIL Score:
    Banks take into account CIBIL scores before disbursing the loan amount and its corresponding interest rates. Today, it has become imperative to maintain a good CIBIL score to showcase one’s financial attribute as healthy and stable. Timely payment of credit cards, other EMIs and a stable source of income contribute majorly to a healthy CIBIL score. This is an important pre-requisite to determine the capacity of the applicant.
  3. Type of Loans:
    Since interest rate is a vital component of a home loan, it is important to understand the intricacies of the two types of loans that are offered by banks & NBFCs – Fixed & Floating interest.
    In a fixed rate home loan, the interest rate doesn’t change with market fluctuations while in a floating rate home loan, interest rate fluctuates with market economics and interest rates are linked to a base rate and a floating component. The base rates are decided keeping in purview the quarterly base rate announcements of the Reserve Bank of India. While the Fixed rate is recommended for a loan of shorter tenure, it is not recommended in an ideal scenario. Floating interest rates are recommended since it is usually lower than fixed interest rates.
    A thorough evaluation of the requirements will help to arrive at a suitable choice of home loan.
  4. Lending Institution:
    Many institutions offer the best of interest rates but below par services to the customers. One often looks for the best customer service such as personal assistance, understanding the requirements and tagging along the entire home loan process in addition to the basic offerings details such as interest rates and tenure for the loans. While the interest rate is important, one should also look at other aspects as mentioned. One should look into the institution holistically to finally determine the best suited financial institution.
  5. Interest Rate:
    Interest rate component forms the crux of the application of home loans. Though financial institutions say their interest rates are fixed, there is always room to negotiate the interest rate on a specified amount. A reduction of 0.25% – 0.50% in the interest rates will make a lot of difference in the repayment amount. For instance, one would have to pay an amount of INR ____ for a loan of 50,00,000 at 10% for a period of 15 years; however, he will save an amount of INR ___ & INR ____ if the same principal was offered at 9.75% and 9.50% respectively. Whichever option you choose, do not forget that you can negotiate on the interest rate.
  6. Hidden Charges:
    One should be abreast of all the charges that will levied on the application such as processing fee, service and administrative fee, etc. All the charges are a percentage of the home loan amount and needs to be given due importance while signing the agreement. One should seek clarity from the officials on each and every charge and only then should one finalise the home loan application.

How your credit score can impact your home loan interest rate

It is a dream for every Indian to own a home of his own and in order to fulfil this dream one needs to know the eligibility criteria before applying for a home loan. While home loans are offered based on various factors, the interest rate may differ based on the specifications and requirements provided by the customer. This is where the credit score plays an important role while applying for a home loan. A good credit score helps in creating a first impression while applying for a loan.

Home loan providers or financial institutions look at several variables on the credit report, one of them being outstanding debt. The credit score offers a holistic view on the financial ability of a customer and hence forms an important element in the process of a home loan.

Various banks/financial institutions may have different internal guidelines about the usage of credit scores. They may or may not have a cut-off based on the credit score. However, majority of the new loans are sanctioned to customers with a credit score greater than or equal to 700. Therefore, higher the credit score, better the chances of your home loan getting approved with a competitive interest rate. This however does not mean individuals with low credit scores will not get any loans sanctioned. It is just that their chances of getting a loan sanctioned may be reduced, unless this is backed by a genuine situation which resulted in the lower credit score.

The importance lenders give to credit scores makes it imperative to improve one’s score as it will help determine the cash outflow. Paying your bills on time is the first step towards maintaining a decent credit score as delay in payments like credit card dues or other EMIs may have an impact on the credit score of the borrower and re-building it into a positive score can be a lengthy process. One should also have a maximum of 2 accounts during the initial days of their career which includes a personal and a salary account for salaried employees and current account for business individuals. This is important as multiple bank accounts lowers one’s average account age which would eventually have a large impact on one’s credit score. Moreover, multiple bank accounts are a risky practice for a new credit user.

You can maintain a good Credit Score by ensuring timely credit card payment as Credit card providers regularly send data to credit bureaus which are further assessed by lenders to ascertain a customer’s credit worthiness. One should therefore make a list of all accounts and check recent statements on a regular basis to determine how much is the outstanding balance and the interest rate levied on it. This helps in facilitating a payment schedule/plan that provides an available budget for debt payments towards priority payments.

DHFL announces ‘Home Loan Spot Sanction Offer’ in Vasai, Maharashtra

DHFL announces a ‘Spot Sanction’ offer for ‘Home Loans’ on 18th, 19th  & 20th July 2014, between 9 a.m. and 9 p.m., at the DHFL Vasai (West) Branch, Shop No.1, Milan Apartment, Manickpur Road, Vasai (West).

The DHFL ‘Spot Sanction’ offers an ‘in-principle approval’ for a home loan and is at the sole discretion of DHFL Management.

Customers need to carry relevant credit related documents which include PAN/ TAN card, address proof, bank statements and tax returns .

Note: Loan amount sanction & disbursement as per DHFL policies. Free legal and technical guidance available for home buying.

DHFL announces ‘Home Loan Spot Sanction Offer’ in Navi Mumbai

DHFL announces a ‘Spot Sanction’ offer for ‘Home Loans’ on 17th, 18th & 19th July 2014, between 9 a.m. and 9 p.m., at the DHFL Navi Mumbai Branch, Block No.7, Raigad Bhavan, 2nd Floor, Sector 11, CBD Belapur, Navi Mumbai.

The DHFL ‘Spot Sanction’ offers an ‘in-principle approval’ for a home loan and is at the sole discretion of DHFL Management.

Customers need to carry relevant credit related documents which include PAN/ TAN card, address proof, bank statements and tax returns.

Note: Loan amount sanction & disbursement as per DHFL policies. Free legal and technical guidance available for home buying.

Mr. Rakesh Makkar goes on a Live Chat on Twitter on April 25, 2014

Mr. Rakesh Makkar, President & CDO, DHFL shall be on a Live Chat on Twitter to answer your home loan queries.

To be able to join the Tweetchat, the first step is to follow Mr. Makkar on the Twitter handle @DHFL_India.

Date & Time of the Live TweetChat: Friday, April 25, 2014 between 4.15 and 5.15 pm.

DHFL launches Gudi Padwa offer for Pune Home Loans

DHFL, India’s second largest private housing finance company, has announced its Gudi Padwa offer of 0.25%* reduction in rate of interest and 25%* waiver on processing fee for home loans in Pune, from 24th March, 2014 to 2nd April, 2014.

Puneites can walk into any DHFL office across 10 locations in the District and avail this Gudi Padwa offer, for buying their dream home.

 

*This offer cannot be combined with any other offer that DHFL may come up with from time to time. Also, the final decision on loan sanction and disbursement is at the discretion of the DHFL management. Terms & Conditions Apply.

 

DHFL announces an exciting home loan offer exclusively for women

DHFL has announced an exciting offer on its Home Loan products exclusively for women customers, under which all
single / first woman applicants and sole / co-owners in the property will be eligible for a 25 bps (0.25%) waiver on the
Rate of Interest.

This scheme is valid till 25th March, 2014 and can be availed at any DHFL office across 456 locations across India.

All women customers who avail a home loan during this period will be eligible for a 25% discount on processing fees.

DHFL’s Aashray Deposit Plus with a New Variant helps your Investment Double in 86 months

DHFL launched, ‘Double My Money’, an attractive variant of its Fixed Deposit product ‘Aashray Deposit Plus’. This product variant enables investors to double their investment within a period of 80 and 86 months, basis definitive parameters. DHFL FD product range has attractive returns, with the added benefit of safety with CARE AA+ (FD) and Brickworks BWR FAAA credit rating.

Under the DHFL Aashray Deposit Plus ‘Double My Money’ variant, deposit is accepted only on a cumulative scheme as explained in the table below and interest is compounded on semi-annual basis.

DHFL Aashray Deposit Plus Double My Money Fixed Deposit Scheme
Particulars Rate of Interest (% p.a.) Tenure (Months) Amount
All Individuals / Trusts

10.00%

86

Less than ` 25 lakh

10.25%

84

` 25 lakh or more
Privileged* Customer

10.50%

82

Less than ` 25 lakh

11.00%

80

` 25 lakh or more

*Privilege Customers such as Senior citizens, existing DHFL home loan borrowers, existing DHFL stakeholders, defence personnel and widows, are eligible for an additional interest of 0.50% over the card rates.

‘DHFL’s Aashray Deposit Plus Double My Money’ can be availed by individuals, joint individuals, minors, proprietorship concerns, partnership firms, companies, trusts, associations clubs etc. at a minimum deposit amount of ` 10,000 and thereafter in multiples of ` 1000 from any of DHFL’s branch offices across India.

All individual depositors and first depositors in joint holdings are eligible for ` 1 Lakh Free Accidental Death Insurance.

To know more visit: http://www.dhfl.com/fixed-deposits/aashray-deposit-plus-double-my-money/

DHFL Home Loan Mela at Karaikudi – Tamil Nadu, India

DHFL is organising a mega ‘DHFL Home Loan Mela’ from January 24 to January 26, 2014, between 9.30 am and 6.30 pm, at the Subhalakshmi Palace, Chekalai Road, Karaikudi - Tamil Nadu, India.

The ‘DHFL Home Loan Mela’ will bring under one roof the best possible opportunities in home buying for customers in Karaikudi and neighbouring locations. Over 20 projects are being showcased by prominent builders & developers.

Entry Free