Common Mistakes To Avoid While Taking A Home Loan

Want to buy your dream home but don’t have sufficient funds? Getting a home loan is the best option for you as waiting to save up the entire amount to buy a home seems impractical. Getting a home loan in India has become rather simple and there are many sources offering the best interest rates to you.  It is most ideal if you first study the home loans rules and regulations, understand and verify them in order to get the loan that suits your needs. One must be precautious and should seek the help of professionals in order to get a loan from a source that is authentic and from the organization that is offering the best amongst its contenders. Here are some mistakes that one must steer clear of while applying for a home loan in India.

• Miscalculating finances:

This is a mistake that is committed extensively while getting a home loan. They assume that just because they are opting for a loan, they can opt for the maximum amount that they are eligible for. One must first go through his savings, calculate his long term and short term expenses and then finalize a budget that will be suitable for him. One may be eligible to get a loan, but repaying it can be tricky and thus one must only take a loan that he can easily repay while leading a normal and comfortable life in order to avoid stress and anxiety.

• Not having enough funds as down payment:

This is another common mistake people make while buying a property. Many people just assume that they can go ahead with a property purchase without sufficient funds for down payment. While the loan may be covering a large sum of money that is going into the purchase of a home, it is imperative to have some amount as a down payment while getting a home loan in India.

Note :

As per the RBI guidelines, 80% of the total cost will be allowed for the housing loan if the property price is between 30 lakhs to 75 lakhs. The remaining 20% of the cost has to be provided by the customer as down-payment. If the value of the property is below 30 lakh, then 90% of the cost can be taken as loan and the 10% will have to be arranged by the customer. In the case of properties that cost more than 75 lakhs, 75% of the amount can be taken as loan and the remaining 25% should be accounted for by the customer as a down payment.  If one fails to show the aforementioned stipulated amounts, it is likely that his application for a loan may not be approved.

• Finalizing the lender before finalizing the property.

Many often people are curious about their eligibility and the process and choose to finalize the lender first. This is a wrong practice and best avoided. It is ideal to first finalize a property, do thorough research on it, check its authenticity legally and then apply for the loan. Following this process will prevent any chances of rejection that may occur if a property is not verified or if it is not up to the satisfaction of the lender. Imagine what a tedious and futile process it will be if you have chosen the bank first, done all your research on it and then your loan gets rejected due to the property that you have chosen. Thus, it is always suggested to choose a property first and then apply for a home loan in India.

• Not doing enough research:

Many often, some people opt for a certain bank or lender just based on suggestions from their friends or family without any proper research or market study. Each person’s eligibility, repayment capacity, and needs are different and it is very important to choose a lender who is offering the best pertaining to your needs. Studying the home loan rules and regulations, comparing them and seeking the help of a legal consultant in order to verify the authenticity of the lender is crucial. It is an extremely important part of getting a home loan, but a step many don’t follow thus regretting later after opting for a scheme that is not convenient or suitable to their needs and capacity.

• Not buying any life or property insurance policy:

 Imagine that you have taken a huge loan and a medical emergency comes up. This situation can be really troublesome as a large sum of one’s earning is dedicated to paying off the loan. Taking care of unexpected medical expenses can become a challenging task. Many people fail to understand the importance of health and life insurance in this situation. If you are seeking to opt for a loan, you must first ensure yourself and your family so that your well-being is not compromised on due to the home loan that you have taken. Likewise, it is also important to take property insurance to make sure that the individual is not left financially distraught in case of any damage due to natural calamities or similar events.

These are just a few of the many mistakes that you should avoid making while getting a home loan in India. Taking all the right precautions and opting for the organization that is offering a suitable interest will help you have peace of mind and comfortable life in the long run.