3 Precautions To Take While Applying For Home Loans in India
You are about to enter into a legally binding financial contract for 20 to 30 years. Hence, it is vital to take the necessary precautions rather than regretting your decision later. Though a home loan is the only way to ever own a home for most borrowers, you need to take a smart risk rather than gaining a liabilitythat you cannot afford to repay. Here are the precautions that you need to consider:
Research well:
First time borrowers will always benefit more from online research. However, it is not the only way to find the required information about several aspects of the home loan. So, talk to the loan officer, branch manager and resolve all the queries you have. Take advice from a personal finance expert; however, don’t take out of context generic advice. For example: It is a standard stipulation in the home loan industry to opt for a home loan with the lowest duration possible, since that way you save sufficient funds that you would have otherwise paid as interest. But, if you have other liabilities or expenses, which does not allow you to pay more EMIs, then you will have to choose the tenure based on your repayment capacity and prepay the loan as and when you can. It will be a better strategy than setting up higher EMIs than what you can afford.
Prioritize right:
A home loan package is a multi-faceted financial product. You cannot be driven to find the lowest interest rates possible. You need to understand and select the criteria that will affect you personally. For example: Most organizations recommend step up repayment option to professionals. Will you financially be in a position to afford that? You cannot select this option without doing further research in your personal finances and taking the right advice. Simply put, selecting a wrong repayment option can be a costly mistake. You may like the no-prepayment charges policy of floating interest rates or the lower home loan rates for the floating interest. But, if you are not in a position to afford the potential fluctuations, then you will have to stick with fixed rates. Don’t choose the home loan structure by getting swayed emotionally. You need to play it smart and play it right.
Negotiate efficiently:
Once you meet the home loan eligibility criteria and submit the documents required for home loan, you will get a chance to personalize your home loan agreement. This is the right time and if you don’t take advantage of it, you never will. Whether you want lower interest rates or anything else, this is the time to ask for it. So, be effective and finance-savvy while you negotiate for the details. Most borrowers are not aware about it and miss out this opportune moment.
Eventually, when you obtain a satisfactory loan agreement, you will be glad about every minute that you spent in making it work for you.
