Taking a loan prior to 1999 was a big decision. There was a lot of thinking and researching. Also, the income levels back then did not permit for everyone to take a bigger loan.
Now, taking a loan has become very easy due to the various options and many lenders being present in the market. Also, with the rising income levels, you don’t need to wait until you cross 30 to take a home loan. However, a home loan is still an important decision and hence you must consider these 5 points very carefully if you want to take a home loan;
Affordability:
You need to research about the EMI that you can afford to not only pay the loan amount but also manage your expenses and other investments. Yes, Bank/NBFC’s usually do not let you pay more than 40% of your salary towards loan. You need to hence keep a check on your regular expenses so that there is a balance.
Credit Score:
The only mantra you need to keep in mind is “Higher the credit score lower the interest rate and EMI”. Yes, maintaining a good credit score helps you get a loan very easily and also at a good rate. Maintaining it however is a long process. Hence using a credit card and repaying it on time will help you better your score. Similarly taking a personal loan and not repaying (defaulting) on time can reduce your credit score.
Home loan Down payment:
You need to remember that the Bank/NBFC usually finances anything between 70-80% of your home loan amount. Hence the rest will have to be paid as down payment. So, if you’re planning to buy a home early in your career, you better start saving first for the down payment.
Job stability:
A secure job is the foundation of you being tension free while repaying off a home loan. The reason being that your EMI’s will be deducted until the loan tenure exists. But if you try shifting jobs, you will need similar or higher income to not only repay off the loan but also to manage regular needs and expenses. Hence you need to be very cautious with job hopping when taking a home loan.
The need of a Guarantor:
This is directly related to your credit assessment. When your credit score is very low, the banks usually give you a loan only under the condition of a guarantor who will provide guarantee on you repaying the loans. Yes, it is very tough to find someone who is willing to be a guarantor and hence be very cautious with your credit score.
These points must be kept in mind always while considering taking a home loan early in your career. Researching on it will help you benefit in the long run.
