When we are working towards the dream of achieving the goal of buying a big house involving 1 Crore Home Loan EMI or 80 Lakh Home Loan EMI, our research is mainly focused on finding the ideal property and the ideal lender, right? In spite of the fact that these two choices are of the utmost significance, the pre-loan phase, which entails ensuring that one is in a position to responsibly repay a mortgage loan, is often overlooked by prospective homeowners. To determine whether or not you are prepared monetarily for it, we will explain the following four stages to you:
Checkpoint 1: Accumulation of the amount necessary for the Down Payment
The majority of borrowers requiring a 1 Crore Home Loan EMI loan should remember that lenders typically give loans for 75–90 percent of the value of the property; hence, homebuyers typically need to fund a minimum of just 10–25 percent of the property’s cost in order to close the deal.
However, rather than just paying the absolute minimal component for the down payment, strive to contribute a higher proportion from your own pocket (about 30–40 percent) by amassing a corpus for it. This will make it easier for you to make larger purchases in the future. The logic behind this is that if you make a larger down payment and other contributions, the amount of money you will need to borrow and repay it back, together with any interest that may be applicable to your house loan, will be lower.
Make sure you have a sizable down payment saved up before applying for an 80 Lakh Home Loan EMI loan since this will reduce the amount of your monthly payments. If you are able to stretch your resources and dig a little deeper into your pockets during this pre-loan phase, you will ensure that you will require a smaller loan amount, which will, in turn, lead to cheaper EMIs when the loan is taken out for a longer period of time. Beginning to invest in mutual funds through the SIP method approximately 4-5 years before taking out a home loan is a wonderful approach to start accumulating such a corpus. The amount of money that you can contribute each month toward this goal will determine how much of a difference this strategy will make.
Read Also: Easy Science Experiments to Improve Your Children’s Scientific Knowledge
Checkpoint 2: Re-look at your credit score
Before deciding whether or not to grant you a loan for 1 Crore Home Loan EMI, lenders will evaluate your creditworthiness based on a variety of criteria, one of the most important of which is your credit score. Because of this, it is imperative that you verify both your credit score and your credit report prior to submitting an application for a mortgage. If you fail to do so, it is possible that any problems on your credit report may be overlooked, which would have a negative impact not only on your credit score but also on your chances of obtaining a loan approved.
You should make it a habit to check your credit score and report on a regular basis through the use of online financial markets because these platforms offer this service for free and also provide monthly updates. In addition, checking your credit score and report before applying helps the borrower get an accurate idea regarding his credibility and chances of loan approval. This is assuming, of course, that the borrower wishing to have 80 Lakh Home Loan EMI does not fail to get approval for the loan for other reasons, such as failing to meet the minimum income criteria, reaching a certain age, or providing the required documentation.
Checkpoint 3-Existing debt to income ratio should be checked.
A borrower’s debt (EMI)-to-income ratio is another crucial aspect that determines whether or not they are eligible for a loan. It is the proportion of your income that is now going toward the payment of debts, such as the bills for your credit cards and the EMIs on your loans. It is a measurement of the borrower’s capacity to repay their various loans, and a larger ratio indicates that a significant portion of the borrower’s monthly income is going toward the repayment of debt.
The majority of lenders giving 80 Lakh Home Loan EMI, whether they are banks or HFCs, may be hesitant to lend to borrowers who have a debt-to-income ratio that is greater than 60 percent (including the EMI for the new loan). A greater EMI to income ratio indicates that there is an imbalance between the individual’s income and obligations, and it raises the chance of defaulting during future repayments, particularly whenever there is an unexpected expense or a financial emergency.
Before qualifying for a home loan, you should first determine your existing debt to income ratio. If the ratio that is calculated is greater than 60 percent, you should think about paying off some of these debts. For example, you could foreclose on a loans or prepay the loan with the highest interest rate. This is because the most expensive loans or credit card would be the one with the highest interest rate. This would help in lowering your DTI ratio, which in turn would improve your chances of having your loan application approved. If your ratio of debt to income is high, the lender may decide not to provide you with the loan, or they may charge you a higher interest rate. Either way, the likelihood of this happening is considerable.
Checkpoint 4: Get ready for a commitment over the long term
Even if you have the financial means to pay a higher monthly instalment for 80 Lakh Home Loan EMI like if you can repay 1 Crore Home Loan EMI too, you should consider taking out a home loan with a longer-term, such as 20–30 years so that you can comfortably manage the EMIs while still paying off the loan. From the very first month that you make an EMI payment, you should start depositing approximately 15–20 percent of the value of your monthly EMI into a systematic investment plan (SIP) for a mutual fund. This would make it possible to build up a corpus that might be used for prepayment or foreclosure on the mortgage in a shorter amount of time, perhaps 10 to 15 years.
