If you are planning to take a home loan, check your credit score. Your creditworthiness plays a crucial role in the home loan deal you may get – lower interest rates and better loan terms.
For the majority of Indians, owning a home is one of their most prized ambitions. Homeownership is consistently ranked among the top desires for individuals of all ages, according to numerous surveys. It’s not too late to start if purchasing a home is one of your financial objectives and you’re in your 40s. Compared to your 20s and 30s, you should be well-established in your work by this age, with a higher income, more defined financial objectives, and larger savings. Here are some considerations to make when you have selected a property and intend to take out a home loan.
Before you apply for a loan, check and raise your credit score.
Verify your credit score if you intend to apply for a home loan. The home loan offer you receive—which may include better loan terms and reduced interest rates—depends heavily on your creditworthiness. Better rates are available to you if your score is 750 or higher, which shows that you are a low-risk borrower. Your repayment burden may grow if your score is lower since higher rates may follow. You can bargain with your lender for a better interest rate and loan terms if you have a higher credit score. You have enough time to improve your credit score if you purchase a property in your 40s. To keep your credit score high, make sure you pay back your loans and credit card balances on time and on a regular basis. Your total financial well-being is also reflected in your credit score. Since you’re more likely to have some debt in your 40s—credit cards, auto loans, etc.—maintaining a decent score shows that you’re handling your bills sensibly.
Choose the lender wisely
For 15 to 20 years, a home loan is a long-term commitment. Therefore, it is crucial that each phase of the loan application procedure be carried out with careful thought and investigation. Recognize processing fees, penalties, payback charges, and other loan-related expenses when you are looking for a house loan. Examine lenders according to these criteria as well as the characteristics of their loan packages. Make sure to review the loan document’s fine print. Additionally, evaluate the lender’s reputation and integrity by looking at their past customer service.
Reduce your EMI by making a greater down payment.
Your EMI outgo may be decreased with a greater down payment. To lower your loan amount and EMI load, think about making a down payment with any additional money or savings you may have. But it’s crucial to maintain the assets and savings you’ve put away for other financial objectives. When you make the decision to purchase a home, budget for the down payment in advance. Usually, banks lend 80–85% of the property’s market value, with the borrower responsible for the remaining 15–25%. Since lesser savings can be rebuilt later, think about using them for this purpose. But don’t take money out of your emergency fund.
Think about getting a shared loan.
You probably have a lot of financial obligations throughout your 40s, which could restrict the amount of money you have available. In this instance, there are numerous advantages to taking out a joint house loan. Compared to applying alone, it increases your chances of acceptance and provides greater tax savings. When evaluating your loan application, lenders usually look at your income and repayment capacity. To increase your chances of loan acceptance, you can apply for a joint house loan with your financially secure spouse. A combined loan may also enable you to split the repayment burden and qualify for a longer term.