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3 Basic Steps to Consider before Taking up a Home Loan Purchasing a home is a very big decision and one which should not be taken lightly. It is a longterm commitment and there are a number of different factors, which must be kept in mind, before applying for the same. Prior to making any formal commitment, you must be aware of the fact that you could spend the better half of the next decade repaying this loan. Here are a few things to keep in mind before taking up a home loan: 1. Know the maximum eligibility amount The amount you are eligible to receive is calculated based on the annual income and the credit history of the past. The bank must be sure that you will be in a position to repay the amount of the loan, including what is owed in the form of interest. Thus, they take the annual income into consideration. This includes only the salary heads of your paycheck and not any other allowances included in the monthly income. For example, the medical and living allowances are not taken into consideration by the bank and this is why your calculations may not match those done by the bank. If you have a dependable source of income and a good credit score banks could offer a loan of up to 80% of the total cost of the house. 2. Check the CIBIL Score The credit worthiness of an individual plays a major role in determining the amount of the loan, as well as the rate of interest. CIBIL has come up with a system of calculating a person's score in an easy and convenient manner. Based on the credit history like; timely payment of bills, cheque bounces, existing loans, timely repayment of loans etc. the credit score is calculated. This ranges form 300-900 a person with a high credit score, is more likely to receive a Property Loan with a reasonable rate of interest. Thus, it is important to always keep a check on the CIBIL score and take some steps to make sure that you score high in this department. 3. Loan Tenure EMI is the amount which has to be paid towards the loan on monthly bases. The longer the tenure of the loan, smaller will be the amount to be paid in installments. An EMI calculator can be used to narrow in on this amount, so that you have an idea of how much will have to be set aside, in order to avoid defaults.