In our work-life period spanning around 2-3 decades or so for most people, one of the most crucial financial life goals we all aim to achieve is to become the owner of a home someday. And amidst the continuous quest to realize the dream of owning a home, most homebuyers require a PNB Home Loan to take a step forward and get closer to this dream.
From the vital decision of deciding the location of the property to zeroing in on a suitable lender, homebuyers need to practice due diligence at various decision points in order to strike the right deal for both property & home loan. Also a rejection or difficulty faced in any of the steps can take you a step backwards in the dream journey of owning a home.
Here let us deep dive and know some solid financial planning steps for housing loan borrowers to follow and ensure they strike the best home loan along with the best and lowest PNB Housing Loan Interest rate:
Get a co-applicant looped into spike up eligibility.
The big-ticket size of home loans often makes it difficult for individuals to single-handedly get it approved. Insufficient income, low credit score, high total EMI obligations, etc., are some of the common rejection reasons for many home loan applicants. Such borrowers can submit an application with PNB Housing Loan upon boosting their loan eligibility and approval chances by lopping in a family member as co-applicant(s), preferably those with stable income and good credit score. Besides boosting your loan approval chances, adding a co-applicant can also increase your eligibility for a bigger loan amount if required. Moreover, looping in female co-applicants can additionally fetch you a better PNB Housing Loan Interest rate, given that many other lenders also offer concessional rates of usually 0.05% to female housing loan borrowers.
Attempt on contributing a bigger chunk as a down payment
The ratio of the house property’s cost set to be financed by the lender is also termed as the LTV ratio. The final level of the LTV ratio for the PNB Housing Loan is majorly dependent upon the lender’s credit risk evaluation of home applicants. Hence, home loan applicants should initially aim to first accumulate the minimum requirement of about 10%-25% of their property’s value in order to make sure they are financially adequately prepared for availing of home loans.
Given that contributing a higher down payment reduces the credit risk for home loan lenders, home loan applicants making higher down payments tend to have higher chances of loan approval. Some banks or financial institutions or lenders also offer lower interest rates to those opting for lower LTV ratios.
Hence, housing loan applicants looking to reduce their interest costs should aim at creating bigger corpora for their home loan down payment. However, amidst the efforts to create this corpus, do not end up compromising on your emergency fund. Avoid disturbing your investment corpora as well, which are earmarked for achieving crucial financial goals. Otherwise, striking a financial emergency or arrival of maturity of important financial goals can push you towards availing of high-interest cost loans.
Closely examine your housing loan EMI affordability.
Mostly, a lot of home loan lenders take into consideration the home loan applicant’s repayment capacity while evaluating the received application. Broadly saying, most banks and HFCs tend to generally prefer lending to applicants having total EMI obligation (inclusive of the expected EMI for a new home loan), remaining within 50%-60% of their net/gross monthly income. Those breaching this mark tend to possess lower chances of getting their loan approval or might be charged a slightly higher PNB Housing Loan Interest rate. Therefore, applicants whose EMI obligations exceed this limit can try to lower their existing loan EMI repayment obligations by prepaying some of their current loans. They can even opt for a longer tenure of home loan and/or make a higher down payment to boost eligibility.
PNB Housing Loan applicants can additionally take the assistance of online home loan EMI calculators to arrive at their suitable EMI amount based on their repayment capacity. Upon applying for a home loan, post identification of optimum EMI would thus, lower the chances of defaulting on EMIs in the future during the repayment tenure.
An emergency fund should include housing loan EMIs of at least 6 months.
Any day, any time in our life, the arrival of financial emergency or a variety of income disruptions due to reasons like sudden job loss, illness, disability, etc., can crop up any day and at any time to adversely affect your PNB Housing loan repayment capacity. Failing to timely and regularly repay home loan EMIs on time can then cost you hefty penalties and reduce your credit score.
While the thought of liquidating your existing investments for repaying your home loan EMIs may be available if you are an investor, remember that doing so can adversely affect your long term financial health. Hence, to ensure timely repayment of your home loan EMI during financial emergencies, including in your emergency fund 6 months’ EMI obligation of your expected home loan.
Definitely review your credit report and score before applying for a housing loan.
Your credit score is amongst the first and foremost filters taken into consideration by lenders while evaluating your home loan application. A good credit score in India, considered usually to be 750 and above, can provide an uptick to your loan eligibility and even fetch you a lower PNB Housing Loan Interest rate. Hence, it is always prudent to review one’s credit score before applying for home loans. This habit also enables those having lower or no credit scores to take the required corrective measures to build/ improve it and then, later on, apply with an improved and good credit score.
Also another vital step is to develop the habit of from time to time reviewing credit reports every month. This habit would allow you sufficient time to make corrective efforts, if required, to improve your credit score and get the errors/discrepancies (if any) rectified at the earliest by the bureau.
Thoroughly compare housing loan offers from the maximum lenders possible.
A wide array of features like PNB Housing Loan Interest Rate, applicable processing fees, loan repayment tenures and other associated costs can differ for a varying set of applicants and/or different lenders, based on their risk assessed of home loan applicants. Hence, it’s always prudent to compare maximum lenders to the extent possible before finalizing on any specific lender. Nowadays, many lenders may tend to also offer preferential rates or better service terms to their existing customers, and prospective applicants can ideally first contact the banks/NBFCs with which they already have some form of the existing consumer relationship. Making such a comparison of existing and prospective lenders will allow PNB Housing Loan applicants to find the best home loan deal in India with the lowest interest rate, suitable loan repayment tenures and appropriate loan amounts.