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5 Points to Consider Before You Apply for a Home Loan

Explore 5 key points to consider before you apply for a home loan.

Having a place to call home is a fundamental need, right up there with food and clothing. For many of us, owning our dream home is a significant and highly coveted investment goal. However, with the skyrocketing real estate prices, saving up enough funds to purchase that dream home can be an uphill battle. This is where home loans come into the picture, providing financial assistance to make homeownership a reality.

Before you embark on this exciting journey of homeownership and apply for a home loan, it’s crucial to understand the essential factors involved. Interest rates, loan eligibility, and flexible repayment options are just a few of the many considerations that can impact your homeownership dreams. A thorough understanding of these factors will equip you with the knowledge and confidence to make informed decisions throughout the process.

The COVID-19 pandemic has underscored the importance of having a safe and comfortable place to call home. With careful planning and a comprehensive understanding of the home loan process, you can navigate this significant financial decision with ease. Remember, purchasing a home is a milestone achievement, but with the right preparation and guidance, it can be a rewarding and fulfilling experience that brings you one step closer to achieving your homeownership dreams.

So, if you are currently thinking of investing or buying any suitable home of your choice, keep these five crucial things in mind before applying for a home loan.

Top 5 Things to Consider Before You Apply For A Home Loan

If you are considering seeking financial assistance to realise your dream of owning a house, you have to carefully examine some crucial points regarding the home loan application process. Here are the most important factors to look into.

#1 Avoid Multiple Loan Applications 

Individuals in the hope of availing early loans make the mistake of sending applications to multiple banks simultaneously. In the process, they forget to note how it will hit their credit scores. You must understand that when you submit a home loan application, the bank checks your CIBIL score. Thus, it ascertains your creditworthiness. However, frequent queries will harm your credit score.

Therefore, as a home loan applicant, prevent a dip in your credit score and avoid submitting multiple applications to different banks at the same time.

Also, research online to know your creditworthiness and if your home loan application will get accepted. You can also check how much loan amount you can expect to get, and apply to a bank accordingly.

#2 Check For Home Loan Processing And Other Charges

The primary thing to pay attention to is the interest rates on a home loan when considering the loan. Ask the lender to explain about processing fees, foreclosure charges, and late payment penalties. Be attentive to understand if there are other costs associated with the GST and document charges. Also, put on your negotiating hat to reduce the total charges at the outset before accepting a home loan from the lender. 

#3 Compare Home Loans From Various Lenders

Another critical point is to compare home loan offers from different lenders. How do you know if your lender offering a low interest rate is not charging a high processing fee and other charges? So, probe deeper and compare interest rates and corresponding EMIs.

#4 Read More Fine Print 

Do not ignore the fine print before you sign the dotted line. Ignoring reading the terms and conditions may result in incurring financial losses just because you signed the document in the blind. Although reliable home loan providers follow a transparent process to sanction the loan amount, if you are in doubt, ask them to clarify things for you. Therefore, it is a good practice to read the home loan application carefully before signing it.

Also, you can ask for clarity on the EMI schedule details given for the whole tenure to repay the amount. Take professional help, if anything is confusing.

#5 Down Payment

Let us explain this in numbers. For example, if the home loan is Rs 70 lakhs, and the bank approves it for Rs 50 lakhs based on your eligibility. You will have to pay Rs 20 lakhs personally. This amount is called a down payment. Therefore, to have less stress on your budget, it is sensible to pay a larger down payment. Also, if the loan amount is lesser, your interest is decreased. Moreover, to ensure a comfortable repayment, you should make at least a 10% to 20% down payment.

Other Important Things to Check

You cannot be too careful in financial matters. Therefore, before you sign on the dotted line for home loans, do check the following important factors:

Loan Amount:

Several things depend on the loan amount. Also, a home loan is a long-term commitment, therefore, it is better to take an amount that you can repay comfortably. Hence, avail only what you can afford to repay without any delay or defaults. Also, defaults can negatively impact your credit score and future loan eligibility.

Loan Tenure:

Be careful to choose the right loan tenure so you can make your monthly repayments smoother. Also, it will save you from paying huge interest. If you are sensible enough to understand the fine print, then you can bargain on conditions that allow your loan to be sanctioned in stages based on your instalment schedule with the property developer. Therefore, you can pay only the interest amount or pre-EMI interest. 

Pre-Payment Charges:

People have this superstition about moving into a debt-free home. Thus, they prefer to give pre-payments as part-payments or lump sum payments. You may also make a payment towards the principal amount where you repay the entire loan amount before the completion of the loan tenure. Therefore, you can save a substantial amount on interest and become debt-free. So, get a clear picture of the pre-payment charges and choose a lender that allows pre-payments with zero to minimum charges. 

Pre-Approved Home Loan:

It is a good idea to get the home loan pre-approved before finalising the property. Also, this will give you a clear idea of your loan budget and help you negotiate with the developers better. Additionally, the loan process is quick and easy. Most banks and lenders have tie-ups with several developers. Thus, by getting a list of approved developers, you can find the best deals on the best properties.


Keep all documents for both pre-approved home loans and regular home loans. These documents include KYC documents, income documents, and property documents. 

Home Loan Insurance:

Home loan insurance or loan cover term assurance provides financial protection to your family in case of any unfortunate incident.  Therefore, you must take insurance cover on the property to safeguard your family’s interests. Thus, your family can avoid the financial burden of the unpaid dues. 

Inability to Repay:

It is vital to consider your future financial condition before availing of a home loan. Will you be able to repay the loan amount? Also, not being able to repay instalments or loan amounts will adversely impact your credit score. Moreover, you might face legal action if you do not repay. Consequently, you may have to sell your property to recover the dues. Therefore, do consider a detailed negotiation talk with the lender on the loan terms. 

Your Motivation for Purchasing A Home

You must first understand your motive for purchasing a property. Is it an investment or a dream home?  After establishing your motive, narrow down your preferences regarding what type of property you wish to buy. Also, look closely at all factors such as location, security, proximity to your workplace, and developer. 

Assess Your Income and Employment Stability

To avail of loans from lenders or banks two primary things are your income and employment stability. It is these two factors that decide if you have a reliable source of income to repay the loan. Additionally, your employment credentials and service tenure also play a significant role.


After reading the blog, you must now understand about the factors that influence home loans. Also, you have to consider all terms and conditions before you decide to apply for a home loan. In this blog, we have given you a list of five important points that you need to keep in mind before applying for a home loan.

If you are looking for residential projects in Guwahati? Get in touch with the experts at Ridhi Sidhi Group, we have the experience and knowledge to guide you through the loan process. Contact us at +91 8822797071 to learn more about our current projects, or schedule an appointment online to meet with our team. We’re ready to help make your dream of owning a home in Guwahati a reality and provide the best home loans!