Home loans are no less than a boon for people who want to buy their house but do not have enough funds to invest in house property. It helps you buy your house property and pay for it over an extended tenure as per your financial capability. Moreover, you can choose your EMI and tenure at your convenience. However, for some, a home loan can be a complicated product that can make them commit mistakes.
To save you from this, here is a list of amateur mistakes that you must avoid while availing a home loan.
- Not researching the lender
Before you go straight to apply for the loan, you must research well on the available options. You must research various banks, their fees and terms. The best way would be to look for available banks offering home loans and then compare them based on their interest rates and fees. Also, you must assess your needs and look for factors like repayment payment options, hidden charges, etc. You can use aggregators’ websites to make a comparison before applying
- Not reviewing your credit score
The first thing the lender usually reviews is your credit score. Therefore, you must check your credit score before applying. A low score can lead to loan application rejection affecting your chance of availing a loan in future. To avail the best terms on a home loan, you must have a credit score of 700 and above. It can help you get a high loan amount and low-interest rates.
- Not checking the eligibility criteria
It is prudent to check your eligibility before you apply for a home loan. Ensure that you have enough credit score and income. Home loan eligibility also includes factors like income, age, city of residence, etc. If you do not fulfill the home loan eligibility criteria, your application can get rejected. Also, you must furnish all the documents required for home loans. It should be updated and contain complete information.
- Opting for a shorter tenure
Choosing a suitable tenure is crucial to repay the loan comfortably. Often, borrowers opt for short tenure thinking it will help them repay the loan faster. However shorter tenure means higher EMIs. A higher EMI could lead to more chances of committing default on EMI payments, if not planned properly. Therefore, you must always assess your financial capability before deciding on your tenure.
- Overestimating your repayment capacity
Home loans involve a huge amount, and you must be financially capable to repay them. A home loan EMI can prove to be a burden on your monthly expenses if you do not calculate it well. You must include your monthly expenses while assessing your repayment capacity. Your EMI should not be more than 30%-40% of your income. It would be best to use a home loan EMI calculator before you proceed with the application.
Avoiding these mistakes can ensure that you can apply for the loan hassle-free and repay it comfortably. Take the plunge to purchase your dream home by applying for a home loan today!
FinancesGlad is India’s fastest growing online publication Blog for Entrepreneurs, Small business, Bloggers and personal finance experts.