If you’re thinking of buying a property but don’t know where to start, you’ve come to the right place! We’ve got 5 tips on how to buy a property that will tell you everything you need to know about getting home loan eligibility and taking the first steps towards owning your own home.
1) Credit Score
Your credit score is an important factor when buying a property, particularly if you’re financing your home. In India, lenders use it as a reliable measure of how financially stable you are.
Some lending institutions will want to see that you have strong financial management before approving a loan for your home. That said, here are five tips for getting home loan eligibility. Although these steps can help you build your credit score, do be careful about where you get any loans from.
Home loans typically have shorter repayment periods (10–15 years) than personal loans and other types of consumer debt; don’t miss out on saving money by only considering those products with higher interest rates (this includes mortgages).
While paying off home loans early may save you money in interest charges down the road, paying extra toward your mortgage could also negatively impact your credit score, so consider waiting until after repaying one or two personal loans to start saving up for a home loan.
Before you can apply for a home loan, you must have income. You’ll need to demonstrate your ability to repay any debts.
Banks and other financial institutions look at gross income rather than net or take home pay. That means all relevant employment and business income as well as any investment earnings is considered when assessing an application for home loan eligibility.
If you’re self-employed or not employed, you may still be able to apply for a mortgage loan if you have significant assets or savings.
3) Down Payment for Home Loan
To buy a property, first you will need to have enough money for down payment. The percentage of down payment varies from bank to bank and so is home loan eligibility.
In India, home loan requirements vary between 20%-35% while few finance offices might ask you for down payments as high as 40%. For your own interest make sure that you get a home loan eligibility calculator first before planning on buying a property. It will help you plan better and understand what’s exactly required of you.
4) Debt-to-Income Ratio
The debt-to-income ratio is one of several factors your lender will use to determine whether you’re a good credit risk and how much they should charge you for your loan.
Your DTI is simply your monthly debt obligations divided by your gross monthly income, or how much money you make before taxes are taken out. The higher your DTI ratio, the more likely it is that you’ll be turned down for a loan.
To buy property with equity, experts recommend that your debt-to-income ratio not exceed 28 percent; if you have existing debt and want to minimize risk, experts suggest keeping it below 36 percent.
5) Closing Costs
Buying a property isn’t always easy, but getting your financing in order is one of the most important parts of buying. As you begin house hunting, it’s crucial that you know exactly how much closing costs are going to be and how they can impact you in both short and long term.
Ultimately, after paying all those fees—and depending on where you live—you could walk away with 20% or more less than what you actually paid for your home. To help avoid future problems and headaches, here are five tips for dealing with closing costs
Buying a property in India can be a daunting task if you are not familiar with the process. Here are a few tips to help you buy a property in India:
1. Start by researching the different types of properties available in India. You can find properties ranging from small apartments to large estates.
2. Once you have selected a property, contact the property owner to schedule a tour. This will help you get a better idea of the property and ensure that you are comfortable with the terms of the sale.
3. Once you have decided to purchase the property, contact a real estate agent to help you complete the purchase. Make sure to research the different agents in your area to find the best fit for you.
4. Once you have completed the purchase, make sure to get all the necessary paperwork completed and signed. This includes the property deed, mortgage documents, and insurance policies.
5. Make sure to follow all the maintenance and safety instructions that are included