Even in the best of circumstances, buying a new home is stressful. It’s a major decision that will impact you in practical, financial and emotional ways. Securing your finances can go a long way in making the process a simple task.

Stay stable to get loan

Financial security is an important aspect in determining your loan eligibility. A secure job is often an indicative of this security.

Changing a job just before you buy a house could indicate instability and can adversely affect loan eligibility. It is especially difficult for a salaried person moving to self-employment to reflect stability.

Lending institutions like to see steady employment and generally insist that self-employers show three years of tax returns filed as a self-employed individual.

Similarly, as a self-employed person, if you are considering changing your business from a sole proprietorship to a partnership or company, put that on hold at least until your home loan is sanctioned.

In order to determine your financial status, housing finance companies (HFCs) or banks will want to check all your account statements for the past six months.

Moving your money around, even if you are consolidating your funds, could make it more difficult for the lender to figure out what your inflows and outflows have been. This in turn could make it more difficult for the HFC or bank to approve your loan.

Get credit documents in order

There are a series of credit documents that housing finance companies insist on before approving loans. There is no fixed list of the type of documents required; it varies with regard to each individual HFC’s requirement.

Normally a salaried person would be required to furbish his latest salary slip showing the normal deductions, proof of age, Form 16 and proof of residence that could be either a ration card, a passport or driving license.

Self-employed persons would need to produce income proof for the previous three years, duly certified by a chartered accountant, balance sheet for the period, properly audited profit and loss account and proof of age and residence.

The paperwork apart, there are a few factors that could have direct bearing on the overall cost of your loan. Besides the regular EMI (Equated Monthly Installment) that you pay, there are pre-EMI charges, processing fees, pre-payment charges and other charges that may be levied as delay charges, administrative charges, etc. Home loan seekers should properly check details of repayment and compare options available to get the best possible deal.

General paperwork

Paperwork is a tedious yet significant aspect of getting a home loan.

Make a checklist of all the required documents, such as, the original agreement with the builder or developer, the copy of approved drawings of the proposed construction, copies of receipts of payments made to the builder or developer, the allotment letter of the cooperative society or association of apartment owners, etc.

This will guide you in gathering the documents needed when applying for a loan. With a good lender, once the paperwork is in order, almost half the work is done.

With the right financer, some homework and these handy tips, the entire process can be a cakewalk.