While you do have the satisfaction of knowing you will eventually own your home, you also have to grapple with having to spend less money, with fewer treats, with giving up on luxuries that you would otherwise have enjoyed.Home loans are a way through which every employed person can realise his/ her dream of owning a home.
To avail of a home loan here’s a ready reckoner on how you can prepare yourself to stand a better chance in today’s difficult scenario.

Raise more margin money:

In order to enhance your prospects of securing a home loan, personal finance experts say you must try to contribute as much as possible to the cost of the house from your own sources. This will not only ensure a reduced loan to value ratio but also give housing financiers a high comfort while lending you.

Banks are right now insisting on at least 25% contribution from the borrower’s side towards the cost of the house as against 15% earlier. To expedite the home loan approval process, experts advise that you must disclose all your loans and other monthly liabilities upfront, to the lender.

Scout for property near completion:

With cash crunch biting real estate developers, you must ensure that the residential project where you plan to own your dream house is either nearing completion or ready to move-in. Banks right now are extremely cautious on lending for under-construction properties, due to the risks involved in non-completion of such projects.

“Also, before selecting a housing project, you should review the builder’s track record on previous projects,” says Ranjiv Walia, business head, consumer finance, ING Vysya Bank. Banks have, in the recent times, rejected applications of customers where they were unsure of real estate developers’ worthiness to complete the project.

Check your credit worthiness :

While lending, most banks go through a robust process of due diligence, to assess the repayment capabilities and past credit history of customers. They, in fact, are increasingly using credit information reports prepared by Credit Information Bureau of India (Cibil) before deciding on one’s eligibility for a loan.

It’s advisable to be extra particular about paying your credit card bills or EMIs on other loans, on time. In some other economies, payment behaviour on mobile phone bills are also used for assessing credit behaviour.

Club to gain :

A couple/ family represents a combined income and hence repayment capacity is normally higher. Not only it enhances eligibility but also reduces the fixed obligation to net ratio, which is of utmost importance to the lenders. Lenders like to spread their risk and the independent income of two borrowers presents less risk comparatively.

For starters, a joint home loan can be taken by a married couple or a parent and child, depending on their respective credit profiles. In some cases, brothers are even allowed to take a joint loan, but it differs from bank to bank. A joint home loan gives more comfort to lending institutions as one can evidence emotional attachment of family members with property which reduces the risk of default.

Another advantage of jointly taking a home loan is that the co-borrowers can simultaneously avail the tax benefit on principal and interest while filing income tax returns, thus maximising the tax gains of the housing loan.

Keeping in mind the above points it would be easier now to avail a home loan.