Common Mistakes In Home Loan EMI Calculations
Home loans are complex yet worthwhile products as they offer you a chance to own your dream home. There are, however, a few mistakes that people make while making their home loan EMI calculations. Understand and avoid the same to make better financial choices.
1. People don’t undertake extensive research.
Any potential borrower can go online and find out important details from reliable third-party websites. Bank websites also promote their own products and services. There are also ample other websites that offer home loan EMI calculators in India . In addition, they also offer sophisticated financial advice on home loan calculations. Availing these services help you to understand the potential expenses that you are normally unaware about.
2. Factor in the minor expenses.
There are several expenses included in the home loan calculations, some of which are trivial and don’t seem to be important enough today. However, they are sizable collectively. Hence, it is important to take them into account from the start. Here are a few examples of such minor yet relevant expenses:
• HLPP
• Stamp duty
• Processing fees
• Additional expenses during the loan term such as prepayment penalties, switching charges
When you use the home loan calculator in India , include these amounts in your principal amount before you calculate your EMI.
3. People rush to seal the deal.
Most borrowers are in a hurry to complete this process. There is nothing wrong with that; however, in a hurry, they tend to ignore important details. Some of these include:
• Credit Score: People understand that their credit score affects the loan in more ways than one. Yet, people don’t take the time to improve it before applying for a loan. This small step is crucial for loan approval and better interest rates.
• Negotiating Interest Rates: You can negotiate the interest rates with the home loan officers. This practice is neither announced nor encouraged. But, people who are patient enough to ask and negotiate can avail it.
• Terms and Conditions: Very few people attempt to understand the terms and conditions for the loan. This document includes quite a few important conditions for the home loan. For example, most people opt for fixed interest rates, assuming they remain unchanged. Yet, the fact is that it is higher than floating interest rates and susceptible to change over a period of time.
Most investors and business owners, who avail home loan services frequently for their businesses, understand these principles and incorporate them. Thus, it is important to examine your loan applications, credit scores, repayment strategies and relations with banking officers to get the best results possible.
