How to Plan Buying a New Home with Home Loan

No other investment comes close to that made in purchasing one’s dream home. Have you also embarked on this exciting journey of homeownership? Well, it is not uncommon for you to not have the entire amount in a lump sum. Fret not! Simply take the route every other average Indian homeowner has trodden before – consider applying for a home loan.

Buying a New Home with Home Loan

But, before you do so, keep in mind a few steps involved in smart loan planning.

Meeting the eligibility criteria

The very first step in availing a loan is to check whether or not you meet your lender’s eligibility criteria. This would include factors such as your age, your CIBIL or credit score, your monthly income, the condition of the property you’re planning to purchase, and employment or business stability, among others.

Of all eligibility requirements, take special care of maintaining a high CIBIL score (750 or above) as failing to do so might mean high home loan interest rates or worse, rejection of your loan application. 

Planning your EMIs in advance

Home loans are generally repaid in Equal Monthly Instalments or EMIs. Another huge and crucial aspect of smart loan planning is to check your affordability and plan out your monthly EMIs in advance. To check your affordability, use a free online tool such as the home loan EMI calculator. This tool will help you adjust the loan tenure so that you arrive at an EMI amount you are comfortable paying.

Remember, the longer the loan tenure, the lower will be your monthly EMI and the shorter the loan tenure, the higher will be your loan EMI. You must set your EMI after taking your monthly income into consideration. If affordable, choose to close your loan as early as possible as a longer loan tenure also means higher interest outgo. 

Keeping the necessary documents handy

Besides eligibility and affordability, there’s another essential aspect you need to take care of, and that is, submission of required documents. Check with your lender for all the necessary documents, which may differ for salaried and self-employed individuals. Failing to produce all documents or furnishing incorrect documents may lead to loan application rejection.

Finally, there are a few more tips you can follow for a smooth housing loan repayment experience. This includes paying a high downpayment amount if you can afford in order to reduce the total loan principal, keeping aside the EMI money at the very beginning of the month to avoid spending it elsewhere, asking your bank to make automatic EMI payments to avoid any defaults, etc.

Though planning on a new home purchase using a loan may seem daunting and overwhelming, the truth is that you need not work hard; you only need to work smart. Take the right steps from the very beginning, and you have nothing to fear!


Natraj Studied bachelor's degree in finance and business from Telangana University, Nizamabad. A Writer based In India, He has a degree in Charted Accounts and has very knowledgeable in credit repair and Banking Sectors. So, I decided to start a blog and share my knowledge to the visitors.

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