Home Loan

If you have found a dream house to live in, then first & foremost step on the way of your house is to Apply for A Home Loan. There are many conventional & Islamic banking systems that can provide you money to let your dream come true.

This article includes seven important steps you have to follow when taking Home Loan. Look at these steps that you need to know, in order to apply for home loan.

Step 1 Be Decisive:

Make your decision & be clear about it. Following are some points that you must follow in order to plan and manage repaying of installments:

  • Firstly select an area where you want to invest
  • Price of property also depends upon area
  • Make your monthly installment plans
  • Visit different portals in order to find the houses that are available for sale
  • Decide time period in which you will repay home loan, because it will decide your interest rate as higher the tenure greater the installments will be
  • Opt for the financier of your choice to get home loan, and also estimate total loan that you need to buy home

Step 2 Determine Affordability:

Your earnings decide that if you are eligible of taking home loan or not. Financiers that you have decided will keep check on your earning details. If you are working on handsome salary packages then you could be prioritize in lending money by the bank. In this case you can also repay loan in higher installments in a short time period of 10 years. On the other hand if you do not have good monetary capacity then you will be repaying it in a tenure of 20 or more years.

Overall, the key decision when obtaining home loan depends upon your monthly income.

Step 3 Assess Your Information/Capacity To Repay Arrears:

Financier will take into account financial value of your property other than monthly earning, that in case of any irregularity you will be able to repay the loan or not. In other cases, the property you own can be sold by the lenders to fulfill commitment.

Step 4 Choosing The Banking System:

You can choose house lenders from conventional banking & shariah banking system. If you are getting home loan through conventional banking system then you have to pay decided amount of interest that is also known as mark up.

On the other hand Islamic banking proposes two models that are ‘Ijarah” & “Diminishing Musharka”. In the first mentioned model bank purchases your property & you pay rent on monthly basis that is suggested by the bank & after certain time period bank transfer property rights to that individual.

In Diminishing Musharka bank becomes the co-owner of your property & bank sells its part to you over time on a decided interest premium.

Step 5 Be Eligible For Taking A Loan:

There are different criteria that make you eligible for taking home loan, which includes your monthly earnings & the properties you own.

Age is another factor in eligibility criteria e.g.if you are in early years of your employment then there are more chances for you to get a promotion. That can lead in increase of salary, but if you are in middle age that could be bit difficult for you to take heavy amounts of loan out of your earnings.

Step 6 Calculate The Payback Time:

One of the most important step while applying for home loan is calculation of repayment time. The tenure of repayment varies with the resources. It could go from 10 to 20, 25 years as per schedule you have decided depending upon your earnings & assets.

Read : Hunting For a Best Property Agent for Buying or Selling Your Property

Step 7 Documentation For Home Loan:

To get a loan from lenders you need to submit the important & required documents to them as a proof. These documents are listed below:

  • Pay slip that shows your monthly earnings
  • A duplicate of national identity card (CNIC)
  • Give a proof that you are tax payer, show FBR tax slip
  • Papers of your assets that makes you monetarily stable to get home loan
  • All documents related to your current residency

After completing the important steps your lender will verify the information of documents that you have provided and will charge a fee for application process.

These were few but most important steps that you must follow while taking home loan.



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