Common Mistakes To Avoid While Taking A Home Loan
25 June 2023
Owning one’s own home is a dream for many In India. It fortifies one’s feeling of security. It ensures a sense of ownership. It also signifies a mode of settlement and arrival. A significant role is played by home loans in fulfilling these dreams and aspirations. Millions of Indians own or are in the process of owning their homes thanks to the facility of home loans. It is probably one of the only means for salaried working professionals to buy their own homes.
At the same time, the process of buying a home also involves financial investment. One needs to be practical, logical, and thorough before availing a home loan. These home loan tips can be handy for buyers in their journey of buying a new home.
Checking Credit Score
The CIBIL score is a credit score that provides information about the buyer’s ability to repay loans to the lender. It is an important measure used by most loan providers to sanction loans. A borrower must always check their credibility via the CIBIL score before applying for a home loan. This will prevent any hindrances in loan approvals.
Doing the research
There is a plethora of financial institutions that offer home loans in the market. The fierce competition among them gives the borrower many options to choose from. The borrower must compare the loan offerings before choosing a particular lender. The reputation, schemes, and expert reviews of these lenders can be checked online and through word of mouth on their social networks. The products, tenures, and interest rates need to be studied so that the right product can be chosen.
Documentation and Procedure
A home loan is a contract between two parties. It involves many legal implications for both parties, especially for the borrower. The borrower agrees to the terms and conditions set by the lender when he signs the documents. Reading and understanding the fine print is a crucial part. Signing the documents unknowingly can result in serious repercussions. The lender may impose unknown terms, conditions, or hidden charges that the borrower is not aware of. All the fine print must be clarified with the lender to avoid future complications.
Personal Financial Planning
Home loan repayments are made in EMIs (Equated Monthly Installments). It is important to make calculations and allocate funds for the EMI payout, expenses, and emergency fund from the monthly income. One must choose the right home loan plan that fits the budget. Missing the due dates and late payments lead to large penalty charges. It is always better to choose a home that allows easy repayments.
Every home loan requires a sizeable portion to be paid as a down payment. This ensures that the borrower can make future payments on time. It also acts as a security for the home loan and ensures a level of trust with the lender. This sum is usually large, and the borrower should have this amount ready before beginning the process of availing of the loan.
Consulting a home loan guide or legal experts before making the decision of buying a home is always prudent. It is better to be safe than sorry.