Be quick to take these steps as home loan rates begin climbing up


In the last two months, home loan rates have begun climbing due to economic changes and repo rate hikes.

If you haven’t taken a Navi Home Loan yet, be quick to not delay and take these steps to ensure you are financially ready to apply for it.:

First, save the downpayment money

The RBI has clearly issued guidelines stating that LIC Home Loan lenders are permitted to finance up to 75–90 percent of the value of a property using a home loan. The down payment can be accumulated. As a result, the person applying for the home loan must come up with a down payment that represents at least ten to twenty five percent of the total cost of the property coming out of his or her personal savings. The ultimate proportion of the LTV ratio would be determined based on the lender’s risk assessment of the applicant’s credit profile and the applicant’s capacity to make larger contributions to the loan.

One should aim at paying a larger downpayment when preparing to avail themselves of a home loan in order to realise their dream of owning a property. This is because of the dual benefits that come with doing so. A larger contribution from the borrower’s own funds will not only lower the overall interest cost of the Navi Home Loan but will also enhance the likelihood that the loan will be approved.

Check if you can afford the EMI.

During the acceptance procedure for a loan, the ratio of the applicant’s EMI to income ratio is another essential element that lenders take into consideration. This ratio is the proportion of one’s income that is being utilised to make payments toward one’s outstanding debts, such as credit card bills and loan EMIs at the present time. The lower the ratio, the better the chances of getting a mortgage loan. The majority of loan providers have a preference for extending credit to borrowers whose EMI to income ratio falls anywhere between 50 and 60 percent (including the EMI on the new  LIC Home Loan).

As a result, prior to filing an application for a house loan, you should ensure that your EMI to income ratio is within the range of 50 percent to 60 percent. In the event that it does not, you should first investigate the possibility of reducing the amount of your current EMIs by either prepaying some of your existing debts or selling off some of your existing assets. If you do so, your overall EMI to income ratio will decrease, and as a result, your chances of having your house loan approved will increase.

Examining Credit Score

A credit score of 750 or more is considered to be in the “good” range by the majority of lenders. Consequently, individuals who possess such credit ratings have a tendency to have higher odds of having their LIC Home Loan application approved. In addition, several companies that provide mortgage loans have started giving applicants with better credit scores access to better interest rates. Therefore, potential borrowers of home loans should first look over their credit reports before filing an application for a home loan of any kind. Those individuals who have a lower credit score will be able to take the necessary steps to improve their credit score, and then they will be able to apply for a Navi Home Loan with a greater likelihood of having their application approved. You can get a free credit report once a year from each of the four credit agencies.

Compare different lenders on multiple parameters.

It is possible for lenders to offer vastly different interest rates, loan terms, LTV ratios, processing fees, and loan amounts, all of which are contingent on the lender’s individual risk assessment of the LIC Home Loan applicant. As a result of this, prospective borrowers of home loans really must make it a priority to compare the terms of mortgage loans made available by as many different lenders as is humanly possible before filing their final Navi Home Loan application. In addition, because the holiday season is already underway, many financial institutions have introduced new home loan offers, some of which include lower interest rates and/or a processing fee concession or waiver. Therefore, potential buyers of homes should shop around for home loans from a number of different lenders before settling on one. This will allow them to find the best possible terms without missing out on any of the enticing holiday deals.

Have a contingency fund set aside for unexpected expenses

It is helpful to have a sufficient emergency fund in place so that you can deal with financial exigencies that hinder your income intakes, such as an unexpected loss of employment or a disability. A good rule of thumb is to have an emergency fund with a balance that is at least equal to six times the amount of your required minimum monthly payments (EMIs), which might include things like rent, insurance premiums, and Navi Home Loan EMI payments. When a financial emergency occurs, having a sufficient amount of money set aside in an emergency fund would make it easier for you to continue making payments on loans and paying for other necessary expenses.

Additionally, potential borrowers of home loans have the option of selecting home loan variations such as home loan interest savers or smart home loan products in order to ensure that they have sufficient liquidity to deal with unanticipated monetary requirements. The interest component of these loans is computed by first deducting the monthly average balance from a loan-linked checking or savings account from the outstanding principal of the loan, which is then multiplied by the loan’s interest rate. Borrowers are permitted to withdraw funds from the linked account based on their liquidity or cash flows, and they are able to deposit excess funds in the account as well. LIC Home Loan borrowers are afforded the opportunity to cut their interest costs at times when they have surplus funds and to access those surplus funds during times when they have been confronted with unanticipated needs or restricted cash flows thanks to this provision.

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