Last Updated on July 17, 2021 by Journal Fact
A beautiful home to stay in is every man’s dream, but the increasing prices of real estate have made this dream a distant future. If you are too planning to buy a house, then don’t think of exhausting your savings, there are better lending options available in the market, that will help you with the required funds. A mortgage loan is one of the financial tools that ensures that you do not delay your dream too long while helping you with credit to buy a house at a lower interest rate. If you have taken a mortgage loan earlier, the entire application process is easy, but for newbies, the process can be nerve-racking.
You needn’t worry anymore; these seven simple steps will help set you up for success.
7 Steps to get a Mortgage Loan
- Check Your credit score: One of the important factors before taking a mortgage loan is to know your credit score. The score of your credit plays an important role in getting a good deal on a home loan or even getting the loan approved at all.
A credit score depicts a consumer’s creditworthiness through a number ranging between 300 to 850. The credit score is based on various criteria like credit history: number of open accounts, total levels of debt, and repayment history, and other factors. The higher the credit score, the more chances are of the borrower getting the loan.
If your credit score is low, then you should start working on improving the credit score to avoid any problems later. You can also check your credit score for any mistakes that might later hamper your mortgage loan.
- Know your requirements: While you are working on the credit score, you should also plan about the loan. List down your expenses, income, any other liabilities and know how much EMI you can afford. It will also help you in finding a home that is affordable and not beyond your financial ring.
You can use the 28/36 rule to estimate the price of the house that you can afford. It is the debt-to-income ratio or the total amount of your gross monthly income allocated to paying debt each month. A mortgage loan EMI calculator can also help you in determining how much you can afford, as it will include the principal amount, interest rate, and the tenure of the loan.
- Look for different loan types: There are various kinds of mortgage loans, so you can also explore these options, before finalizing on anyone.
- Loan against Property (LAP): Similar to a personal loan, LAP is a secure loan in which a commercial or residential property can be kept as a mortgage. The loan is offered at a lower interest rate.
- Commercial purchase: It can be availed by businessmen and entrepreneurs, for buying property like a shop, office space, and commercial complex.
- Lease Rental Discounting: Leasing a property is a common practice, and a loan is also offered against leased properties. The monthly rent is converted into EMI and the loan is given on the same basis.
- Second Mortgage Loan: This is a top-up loan on the properties that are already under a loan.
- Home Loan: The most common mortgage loan is a home loan through which borrowers can refurbish, renovate, and rebuild their houses.
- Consolidate your paperwork: Now that you know which loan to apply for, keep the paperwork handy. It will ensure that you are directly applying for the loan, without missing any document. The paperwork will include the property papers, proof of identity, proof of income, proof of address, and many more.
- Look for the best lender: There are various lenders available in the digital space that offer mortgage loans. Make sure that you explore the loan terms of all the lenders before finalising on anyone. It will help you in getting the best deal at a reasonable interest rate.
- Apply for the loan: Now that all is done, apply for the loan via the lender’s website or app. The application process is completely paperless. All you have to do is fill the form, upload the documents and submit the application. Once all is done, the customer care executive will call you to confirm the details and your application will be approved.
- Make a Repayment plan: As important it is to apply for the loan, it is also necessary to have a repayment plan in place. It will help you in making the right decision regarding the monthly EMI, and also save you from defaulting. The repayment plan will depend on your expense, earnings in each month and your repaying capacity.
A mortgage loan Is often confused with a home loan, but it includes many other forms too. Based on your loan amount requirement and expenses that need to be incurred from the amount, you can choose the loan which you deem covers all your needs.