Five Things I Wish I Had Known Before Purchasing My First House

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Buying a house is one of the most significant financial decisions you will ever make. Most first-time house buyers could only realize their dreams of home ownership by applying for a home loan. A house loan is an excellent option if you don’t want to liquidate your funds or are low on cash. Banks assist in turning your dream of owning property into a reality by offering simple monthly payments and the freedom to select the repayment period that best suits your needs. But before you start applying for a home loan, it’s crucial to know everything about it; after all, it’s a commitment that will last for years until you can return the total loan amount. Here are five key factors to consider before you apply for a loan.

Do extensive research on the loan options

Conduct a thorough study of the options in the market before applying for a loan. Additionally, the three critical components of a loan should be your research parameters.

  • Down payment
  • EMIs
  • Tenure

Before submitting your loan application, research these three elements to help you choose a suitable loan from a top lender with competitive interest rates. The various types of loans include floating rate loans, fixed-rate loans, and combination loans. You need to analyze these options to find the best fit. 

Enquire about the eligibility criteria

Lenders will initially determine your eligibility for a loan based on your income and ability to repay it. Other crucial factors include: 

  • Age
  • Qualification
  • Financial situation
  • Number of dependents
  • Spouse’s salary
  • Job security

Get your loan pre-approved

It is a good idea to have your loan pre-approved before you choose a house. Pre-approval lets you determine your precise spending limit and focus on your house search. Pre-approvals even facilitate speedier deal closing and better negotiation.

Check on affordability

Even though many different housing loan alternatives are available, you must first assess your affordability before applying. In addition to paying the fixed monthly EMIs, you should be able to change them to fit within your standard of living comfortably. Also, keep a consistent revenue stream to cover any unanticipated emergencies and take administrative costs into account the EMI you choose to pay each month. Therefore, while buying a home you like in a location you love is always a choice, being able to afford the loan is also crucial.

Total loan amount 

According to the regulator’s definition, most lenders offer housing loans ranging from 75 to 90 per cent of the cost of the home, depending on your loan value. If you add a co-applicant, the lender may consider their income when determining the loan amount. Your adult kid, parent, or spouse could be the co-applicant. 

When evaluating your housing loan eligibility, you should also consider its cost. In addition to processing fees, administrative costs, and prepayment penalties, the cost will include interest payments. The ideal prepayment penalty for adjustable/floating rate loans should be zero. Additionally, you ought to be able to refinance your loan for a cheaper interest rate with just a small charge. 

Some other important aspects to consider include:


You must determine the equal monthly installment (EMI) amount. Banks provide various EMI options to accommodate and meet the borrowers’ various needs. The amount of the down payment you make when buying a house significantly impacts the EMIs. The burden of making EMI payments decreases as the down payment amount increases. Additionally, it is best to ensure that the EMI amount you choose does not exceed 45% of your gross income.

The tenure

Your repayment tenure is the amount of time you need to repay the approved loan. Your EMIs and the repayment period are related. Depending on the customer’s eligibility, housing loans can be approved for up to 30 years. The burden of the EMI gets reduced with a longer tenure.

While choosing a longer tenure may result in lower EMI payments, it also negatively affects the home loan interest rate that will be charged, forcing you to double or triple the loan amount to pay the high-interest rate. Therefore, if you set a strict budget and have a steady and rising source of income, it is best to select a short payback period with higher EMIs. Such tenures have significantly reduced interest rates to encourage earlier payback. 


To completely understand the loan application, thoroughly read the agreement documentation. A loan requires many documents, including KYC records, evidence of income, and ownership records. Verify that the lender has decentralized its storage facilities so that customers can quickly and easily retrieve documents when needed.


You may benefit from closely checking how the RBI norms are changing on many levels. You avoid further costs by paying the balance due earlier than agreed upon by foreclosing on your home loan. Although buying a home is a significant decision, it will also be your most rewarding experience. A loan is one of the best methods to support your home ownership.

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