Home loans have come an inestimable tool, for utmost people looking to buy a home. Still, the process can turn into a agony, if the borrower commits certain mistakes while applying for the loan. In comparison to other loan products, a home loan generally has a veritably long term and the quantum involved is enormous. Thus, there's no room for mistakes. Given below are seven pivotal mistakes that home campaigners should be apprehensive of, to insure that one can mileage of and service a home loan easily.
1. Too numerous loans in your credit portfolio
Buying a home is a significant investment on your part. In turn, the home loan is also a big- ticket commitment. However, you might just ruin your prospect of getting a loan, If you're formerly ladened with too numerous loans in your portfolio. Too numerous loans would mean raised EMIs. So, your lender may vacillate in approving your home loan. It might also be a drag on your finances. However, it's good to close some of your being loans, If you plan to go in for a home loan.
2. Not having enough finances for down payment
Down payment is the commitment from your end for the asset that you plan to buy on credit. Banks and fiscal institutions have their own criteria of deciding what chance of the asset cost is approved as a loan. Though the RBI has set the minimum down payment figure to 20, lenders are at liberty to increase the down payment figure as they suppose fit. This may be due to colorful reasons like a advanced loan quantum applied or below-average credit score of the aspirant. Make sure that you have finances that are 5-10 further than the generally quested down payment figure. You would presumably lament latterly if your dream of retaining a home is shattered just for the incapability to fund for down payment.
3 Opting the wrong loan product
There are several types of home loan products in the request and the borrower must choose the most applicable loan product, to get the maximum benefit in the long term. For illustration, banks offer floating rate home loans, fixed rate loans, semi-fixed rate loans, home loan with overdraft benefits, incremental EMI home loans and so on. The home buyer needs to figure out his/ her own conditions and consequently, elect the applicable loan product, as else, one may land up paying gratuitous charges or find it delicate to repay the loan.
4 Not comparing colorful banks’ offers
Currently, there are numerous websites, which allow you to compare the home loan products offered by different banks, on the base of interest rate, charges, penalties, etc. Home loan campaigners should mileage of this installation, to avoid opting the wrong loan product, which may put you in fiscal torture.
5 Ignoring ones credit score, before applying for a home loan
Some people commit the mistake of spoiling their credit score, by not repaying the EMIs for small debts like credit card bill or a particular loan. Once the credit score is putrefied, also, it weakens the chances of getting a home loan. So, it's essential to keep the credit score healthy, if you're planning to take a home loan.