It’s a privilege to have a home of your own, especially in the city of dreams, Mumbai, as it involves a lot of struggle and hard work behind the happy scenes, especially when it comes to taking a home loan.
Getting a home loan from a bank or any other financial institution is not an easy job. Thousands of people apply for a home loan; however, only a few home loans get sanctioned. Read further to know why.
Mistakes to Avoid While Taking a Home Loan are:
Conducting Unsound Market Research
Homebuyers sometimes conduct flimsy research just to do it, which can lead to losses. Even a small change in banks’ interest rates can impact your budget negatively. Hence, it is essential first to evaluate all the options available to you patiently and carefully and then opt for an option that offers you a complete package of – low-interest rates, favourable terms of repayment, higher loan amount, etc.
Overstretching the Budget
People usually rush to buy a house without being financially prepared for it. Mostly, banks ask for a minimum down payment of 20% on the cost of your home. To do so, you don’t have to overstretch your budget; you just need to accumulate 40% or more, which will help you ease your financial obligations.
Applying for Home Loan Without Reviewing its Eligibility
For banks and lenders, your credit score plays a vital role in determining your creditworthiness. A credit score assesses your credit and repayment history and tells whether you are eligible for a home loan. A good credit score will help you get your loan sanctioned easily at a lower interest rate. Thus, reviewing home loan eligibility and improving your credit score is essential.
Overestimating EMI Repayment Capability
Before you think of taking a home loan, make sure you are ready to pay EMIs. Homebuyers usually make a common mistake of factoring in future income and salary hikes for agreeing to pay higher EMIs. This mistake leads to a risk of non-payment in the future. It is crucial to ensure that the ‘ EMI of home loan should not exceed 40% of your income ’. In order to find the exact amount required to pay EMI, there are various Home loan EMI calculators available online that will help you find the optimum amount based on your repayment capacity.
There is always a chance to negotiate with lenders, especially when your credit score is up to the mark. They are happy to slash interest rates and waive other processing charges if negotiated with the right points. Also, it is always better to transfer your home loan from a bank charging higher-interest rates to a bank charging lower interest rates.
Failing to Apply for Home loan Insurance
At the end of the day, your ultimate motto should not be to take stress because of a home loan. To avoid unforeseen emergencies that could hamper the repayment structure of your EMIs, it is always better to insure yourself and your family against all unforeseen possibilities.
To ease your journey of buying a home and lower your burden of taking a home loan, many promising real estate investment advisors can help you out. Stead Realty is one of the pre-eminent real estate investment consultants based in Mumbai. With our team of experienced professionals and reliable bank databases, we assist our clients and even developers with their queries and smoothly take them through the process of home loans.