Thumb Rules to Consider while Buying a House on Home Loan – Finance Buddha Blog



Currently, home loan interest rates are all-time low. And with a good credit profile, and good repayment capacity one may get a home loan at the lowest rates. 

But, before you go for a home loan, there are a few important things to keep note of, which includes:

  • The amount of home loan approved to you depends on your eligibility such as your income, CIBIL score, and existing liabilities. 
  • You need to get a fix on other things like the price of the property that you are considering buying. 

After all, a home loan needs the longest commitment as you need to pay EMI towards it for twenty to thirty years. Paying EMIs for such a long time can impact your finances and hence, you need to be extra careful while taking a home loan.

To make it easier for you, here are a few thumb rules to help you:

Know the Exact Budget for your Home Purchase

Deciding your budget is one of the basic thumb rules which you need to follow while going for a home purchase. 

For this, you need to analyse your affordability and then decide the budget. Doing this avoids future financial problems and keeps finances on track. 

Follow 35/50 Rule

While availing of a home loan, lenders ask about your existing liabilities and financial commitments which includes listing down your existing borrowing such as personal loan, car loan, etc.

This is asked because banks generally do not lend an amount on which the EMI will be more than 45-50% of your monthly income.

However, it is always advised to take a home loan where the home loan EMI is not more than 35% of the monthly income while your total EMI including all the loans should not be more than 50% of your total monthly income. Following this will make you feel less burdened and will also allow you to save for other goals.

The credit score is an Important Check

A credit check is also among one the most things which you need to follow while applying for a home loan. For those who have a good credit score, it is easier to qualify for the loan while for others it becomes difficult. Banks even offer a lower interest rate on home loans to those borrowers who have a high credit score. This means having a good credit profile helps in getting a better home loan deal from banks. So, why not check this before applying for a home loan. In case you don’t have a good CIBIL, wait for a few months, take a personal loan for a small amount, start paying its EMI and after a few months when your CIBIL is good, apply for the home loan.

Opt for a Shorter Tenure

Repaying a home loan for a longer tenure may reduce your EMI. But, do you know? This way you will end up paying more on interest which can increase your total cost of borrowing.

This means if you opt for a longer tenure loan to keep EMI’s low, the total interest burden will be increased. so, to keep interest costs low, and happy borrowing you should opt for a lower tenure for your home loan.

Don’t Forget to Do Your Calculations

Not only for a home loan, doing calculations and knowing your estimated EMI is a must for any loan, be it a personal loan or car loan. This is because doing calculations not only helps you to analyse your affordability but also helps you to plan your finances accordingly. Using online EMI calculators is one of the most efficient ways to perform this.

Well, this was all about the thumb rules which one should follow before going for a home purchase through a home loan. Following this will surely ensure a happy borrowing and a financially secure future. 


Thumb Rules to Consider while Buying a House on Home Loan

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Thumb Rules to Consider while Buying a House on Home Loan


Before you go for a Home Loan, read onto this Finance Buddha blog to know the Thumb Rules to Consider while Buying a House on Home Loan.



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