The constant increase in the prices of houses and properties has led many people to choose the HDFC home loan or a home loan option through other lenders to make their dream of having their own home come true. However, HDFC mortgage loan or various other home loan lenders approve the home loan application based on their assessment of the applicant’s credit risk based on their repayment capacity, income, credit rating, etc. it is important for many applicants to prepare financially before making such commitments.
Here, we are going to list the crucial checkpoints that applicants should adopt when applying for HDFC home loans to benefit from better general conditions and reduce HDFC mortgage interest rates or lower interest rates on home loans from other lenders:
Assess your credit report
All mortgage lenders, including HDFC mortgage loan, consider a score of 750 and above to be good. Thus, those with such scores increased HDFC mortgage loan or the chances of home loan approval. Many mortgage lenders prefer a score of 750 and above to approve the applicant’s mortgage application. Many lenders also offer applicants a prime rate of interest if they have a good credit score of 750 and above. Thus, all home loan applicants must first assess their report before submitting the home loan application. Opting for this allows applicants with a score below 750 to take the right steps to improve their credit score first and after that, apply for HDFC mortgage loan or another mortgage lender application on getting a good score.
Remember that home loan applicants can easily access their credit report by going to the office’s website. Alternatively, applicants may even consider visiting online financial markets to obtain credit reports with monthly updates.
Form a body of down payment for a mortgage
According to RBI, real estate lenders involving the HDFC mortgage loan can finance up to 75% to 90% of the value of a property in the form of a mortgage. The final proportion of the mortgage is fixed according to the risk assessment of the lender taking into account the applicant. The rest of the component must be brought from the pocket of the applicant. Thus, the home loan applicant should expect to accumulate close to 10 to 25 percent of the property’s value before submitting the final home loan application.
Remember that a higher contribution to the mortgage amount in the form of a down payment can help reduce your interest. Choosing a higher home loan down payment contribution also increases your chances of getting your home loan application approved, as it lowers the credit risk for the applicant. However, during this process, applicants should not compromise their emergency fund and crucial financial goals to make higher payments as down payments as this may require them to submit expensive loan applications to make facing financial demands or meeting their financial goals.
Strike comparison among lenders
Loan repayment terms, processing fees, interest rate, LTV ratio, loan amount, etc. provided by the HDFC mortgage loan lenders or other real estate lenders can significantly change the basis of an applicant’s credit risk assessment. With various lenders offering HDFC home loans offering home loan option, it is definitely not a suitable choice to visit every lender to compare each of them. One of the best ways to compare is to approach online financial markets to compare different home loan lenders based on your credit score, monthly income, etc.
Assess your EMI accessibility
Real estate lenders, including HDFC Home Loans, take into account the applicant’s repayment capacity when evaluating their mortgage application. Usually, lenders require the applicant’s repayment obligation on a monthly basis, including IMEs on their new and existing loans, to be between 50-60% of their monthly gross or net monthly income. Those who exceed this limit generally have lower odds of mortgage loan approval. So, be sure to contain your monthly loan repayment obligation to 50 to 60% of your monthly gross or net monthly income before submitting your mortgage application.
If you are unable to contain your monthly repayment obligation below 60%, consider reducing it before submitting your HDFC mortgage loan request or request for a mortgage from another lender. You can limit the ratio by prepaying or foreclosing on your existing debts or opting for a longer loan repayment term. You can even pay a larger down payment for a HDFC mortgage loan or another lender home loan to reduce your entire EMI expense, which actually improves your chances of home loan approval.
Form an adequate emergency fund
Financial demands such as job loss, illness, accident etc. are unannounced in nature and lead to lower income. It even impairs your body of financial goals as well as your EMI repayment capacity. Failure to pay your EMI by the due date not only results in massive penalties, it even lowers your credit score. While we always have the possibility of redeeming our investments towards our financial objectives to repay our IMEs. It could have a negative impact on 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 almost 6 months of your inevitable monthly expenses, involving your existing EMIs and your new EMI home loan. So, as soon as you think about going for a home loan, try and, side by side, increase the size of your emergency fund by almost 6 times the EMI of your expected home loan. When emergencies strike at any time, be sure to park your emergency fund in liquid financial instruments such as savings accounts, term deposits, etc.