Applying for loans is a surprisingly easy process now that everything is digitized. Nowadays, you can be approved for a home loan all from the comfort of his/her home. While all of this convenience is good for the comfort level of the borrower, sometimes due to a lack of attention to detail, you might be shocked.
A home loan is not just about taking a lump sum amount of money and repaying it. Using a home loan app is one of the most important financial decisions to be taken for an individual.
Here are four things you must consider before availing credit on a home loan app:
1 Maintaining a good credit score:
A credit score is a track record of your financial responsibility that is maintained by credit rating bureaus in the country. If you have a history of paying your bills in time and not defaulting on any credit card debt, you will have a good and respectable credit score. Your credit score —also known as your CIBIL Score — is a number that ranges from 300 to 900, generally having a CIBIL score of 700 is considered acceptable.
When you have a good credit score, you automatically qualify for easy loans with more affordable interest rates. Apart from getting better interest rates on your loan, the amount will be sanctioned to you much earlier, and the lender will offer you many perks to make the loan more affordable.
2 Interest Rate:
There are two types of rate of interest offered by NBFCs which are termed as Fixed and Floating rate of interest. A fixed-rate of interest is when the interest rate does not change even if there are any fluctuations in the financial market. Whereas, the floating rate of interest signifies that the interest rate will not remain constant, and it will keep on changing as per the market conditions.
Typically most financial institutions used to offer fixed rates on loans because they were easier to calculate. However, nowadays, with the change in times and digitization floating interest rates are becoming more affordable.
It is said that financial responsibility is practised when one does not spend more than 70% of his salary and saves the rest. Checking the affordability is an essential step of your home loan research. As a borrower, you also have other monthly expenses to make like rent, car payments, insurances and household expenses. Therefore you need to make sure that the availed instant loan app does not impact the other expenses which are required to make ends meet every month.
4 Having a Steady Source of Income:
You must get a steady paycheck during your repayment of the home loan. Most of the people who use home loan apps generally hold a salaried position at a company. These borrowers are dependent on their employer to meet their monthly requirements and more often than haven’t been trained well enough on how to save and invest money.
Losing your job can have a devastating impact on your ability to repay the loan instalments. It is always essential to maintain at least one year’s worth of expenses in your savings account. This money should possess sufficient liquidity so that you can access it during times of need.
Using apps so that you can buy your dream home is one of the best ways to get a home loan. Care should be taken to read all the fine print involving the loan. Do not hastily go and sign the first loan agreement you find, instead perform a detailed study of the various offers available and make the best choice for you and your family.