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Applying for a Home Loan? Things to Do Before It Ruins Your Finances

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A proper financial plan and backing are very essential before buying your own house. This is because, unlike other loans, housing loans are of a higher amount. There are various factors that you have to consider while taking such loans. These include repayment tenure, equated monthly instalment payments, and rate of interest. 

However, now with the help of a home loan EMI calculator, you can easily calculate the number of monthly instalments you need to pay for the entered loan amount, tenure, and rate of interest. Moreover, you can readjust the loan amount as per your needs and get different results. This helps you get an estimate of the financial outflow and assists you in making informed decisions. So, let’s get you started on things you need to check on before taking such loans. 

What are the Things you Must do before Taking a Loan for your House?  

Numerous things need to be done before taking a loan. These include evaluating your different sources of income, making a proper financial plan, keeping a tab on your credit score, and determining the equated monthly instalment. All these are discussed below. 

  • Keeping a Tab on Your Credit Score 

Credit Score is one of the most essential factors which determines the interest rate on the loan.  An ideal credit score is a must to ensure smooth disbursement of your home loan amount. Organizations such as CIBIL allot these credit scores. For housing loans, you must ensure that your credit score is at least 700 or above. 

  • Determining the Equated Monthly Installment (EMI) Amount

Before taking the loan, you must determine the equated monthly instalment amount. This helps you in ensuring that you are taking a loan that you can repay in regular intervals. 

  • Making a Proper Financial Plan 

Since such loans are of higher amounts, you must keep track of your savings and investments under them. A proper financial plan after careful evaluation of your assets and liabilities is necessary before taking a housing loan. 

  • Other Financial Goals

You must make sure that taking a loan for your house does not hamper your other financial goals. For instance, you can invest the amount in the stock market or save it for retirement or other long-term plans. 

  • Evaluating Your Sources of Income

You might have either single or multiple sources of income. There are broadly five heads under which income is classified. These are salary, profit and gains from business or profession, house property, capital gains and other sources. Evaluate these sources of income to determine your financial planning towards the loan.


Before taking a loan for your dream house, you must make sure that it is not at the cost of your other financial goals. You must also have your documents in proper order before applying for such loans to ensure quick disbursement of the loan. 

Different financial institutions offer different services for such loans. For instance, PNB Housing offers home construction loans, home extension loans, home improvement loans, and plot loans and has a PAN India branch network. By keeping the above-mentioned factors in mind, you can carefully take such loans which properly align with your financial plans.

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