Common Mistakes To Avoid While Selecting Your Home Loan

  • Added:
    Mar 14, 2014
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Common Mistakes To Avoid While Selecting Your Home Loan Photo by Aishwarya Mahurkar

There are several mistakes that people possibly make with a home loan agreement. It is important to remember that you are sealing a contract with a housing financial organization for almost 20 to 30 years! By and large, there are a few basic errors that you can keep in mind and avoid.

Hurry! Hurry! Hurry!

Most people rush into a loan. You really want to take your time when it comes to signing on the dotted line. Take into consideration a few stages of the home loan process that shouldn’t be rushed into:

• Research - You must be an informed and prepared borrower to understand the implications of a contract that can span for 30 years!

• Interest rate negotiations: These are not easy or obvious. Most home loan executives will try to imply that interest rates are non-negotiable. You shouldn’t rush these negotiations, though. The objective should not be to get an agreement as soon as possible but to find the most suitable house loan for your dream home .

• 100% satisfaction with the loan agreement: What is the loan to value ratio? What is the EMI scheme? Can you afford to pay it comfortably? Are you okay with the repayment plan? These factors can increase over a period of time. Users, however, may not get an increment in their jobs when interest rates spike up. So, don’t hurry this process.

Ignoring Financial Experts

Financial experts understand the importance of improving your credit score before applying for home loans . With a good credit score, you can get the best home loan in India. There are also several insights that experts can provide on lower interest rates and other expenses. For example: If you are a DINK “double income no kids” couple, you can enjoy more tax benefits by signing for the loan as co-applicants. You can also avail tax benefits on the principal amount and interest.

Don’t Review Terms and Conditions

Can you anticipate your pre-payment ability for the next 20 years? Can you anticipate the interest rate changes over the next 30 years? Can you predict your repayment ability for the tenure of your house loan? No. It is hard to anticipate any of these factors. Yet, you enter into a contract and agree to most of these terms. In order to avoid this, you must ensure that the house loan terms are in your favour. 

Fit EMIs in Your Monthly Cash Flow Tightly

Most people don’t anticipate that there can be unplanned expenses or a hike in interest rates. You need to ensure that you can arrange for an EMI every month easily. What would you do if your salary is delayed? What would you do if there are unexpected costs such as hospitalization?  So, do not opt for EMIs that you won’t be able to manage in the months of tax deduction or medical emergency. Set it up well enough to meet all of life’s challenges comfortably.

Author's Profile

Aishwarya Mahurkar is an experienced writer concerning the finance industry. Her articles help in informing her readers of the suitable house loan for your dream home and applying for home loans.

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