5 Mistakes to Avoid When Applying for Home Loans

Posted by Imgc India on August 14th, 2017

With the availability of numerous easy home loans, especially online, buying a new home has become much easier than it was before. But, a home loan isn’t something that most people deal with on a daily basis, and so, some amount of confusion regarding them is not out of place. Every company has its own requirement for eligibility on home loan, and it isn’t that hard to apply for one either. However, there are a certain things you need to keep in mind to make sure that the home loan you choose is the best option for you.

Research your options

Before we buy anything, we like to look at other options as well to find the best deal. Why should a home loan be any different? Not all easy home loans have the same offerings and the same eligibility on home loan. What people generally do is visit their own bank and get a home loan. Though this is the easiest choice, easy isn’t always best. You are making a major financial commitment for at least 15 years; this is a situation that warrants diligent research. Even if you find a small difference in interest rates, it can end up making a huge difference when you start repaying the loan.

Consider all the hidden costs

A down payment and an EMI are not the only costs involved in buying a home, and the property price is not the only expense you will see. There are a number of extra charges that you need to pay attention to. Maintenance costs, property tax, etc. are some such charges. Keep these in mind when you make your budget.

Following the heart

Most of the time, people will tell you to follow your heart. But when it comes to buying a new home, you need to exercise a little control. Sometimes you might find a home that you love, but the costs will be slightly over budget. The home loan agents will tell you how easy it will be for you to stretch your budget. But, a slightly increased budget can very soon become a major burden when it comes to paying it back. Take all things into consideration to make your budget, and then, stick to it.

Always get insurance

It doesn’t matter whether you are the sole earning member of your family or not. Taking an insurance cover for any loan you take is always a good idea. This ensures that your family will not have to pay back the loan, if something was to happen to you.

Consider Mortgage Guarantee Backed Loans

This is a loan scheme under which the banks or financial institutions are provided a Mortgage Guarantee by a mortgage guarantee company against any probable loan defaults by the borrowers. This helps reduce the credit risk faced by the lender, who can then offer better loan terms, like higher loan amounts and longer payback tenures. You will of course have to pay a small percentage as fee, but that amount is well-worth the benefits that such loans offer over conventional home loans.

A home loan cannot be taken lightly. It is a rather major responsibility which must be treated as such.