Funding life’s most significant investments like buying a house may seem like a tough nut to crack, but lending institutions and their easy home loans often come to the rescue. However, most prospective homebuyers commit one or more mistakes on their way down the housing loan route. As a result, they fail to either qualify for a home loan or find themselves struggling to repay it.
Given below are the mistakes that you strictly need to avoid when it comes to availing of a home loan.
Mistake 1: Not Giving Your Credit Score Its Due Attention
It has been rightfully said that “we often overlook the very things that most deserve our attention.” The same is true of a housing loan applicant’s CIBIL or credit score. It is not uncommon to find people ruining their creditworthiness by showing irresponsible payment behavior, maxing out their credit limit, applying for several credit or loan products at a time, not updating their credit records, etc.
Avoid making this mistake at all costs as it has a significant impact on your home loan eligibility. Applicants with low credit scores may either be offered high home loan rates or worse, altogether be denied loan approval.
Before you apply for a home loan, use tools such as the home loan eligibility calculator to know your eligibility in advance.
Mistake 2: Opting for a Home Loan Amount That Is Over-Budget
All health is true wealth, be it physical or financial. In a race to close your home loan faster, do not opt for a loan amount that may overturn your monthly budget. Your EMI outflow should ideally be between 30 to 40% of your income. Anything more and you risk compromising your savings and contingency funds. Always make use of online home loan calculators such as the EMI calculator for a home loan to find out whether or not your EMIs fall within budget.
Mistake 3: Skimming Through the Home Loan Agreement
One cannot over-stress the importance of a home loan agreement. It is the legal document that lists out all the essential clauses of your housing loan. Sadly, most people hastily read through the home loan agreement, only to regret this oversight in the future. Terms like the security cover clause, force majeure clause, prepayment clause, etc. have consequences when not adhered to, which is why you should be conversant with all of them.
So, before you sign the dotted line, be sure to have thoroughly gone through the fine print.
Mistake 4: Choosing to Stay Uninsured
You’re buying a house for yourself and your family’s welfare. A considerable aspect of it is to make sure that you’re insured so that the home loan repayment does not burden your family. Even if you opt out of a home loan insurance, at least get a pure life cover that provides coverage for your housing loan and other liabilities.
Steer clear of these five most common mistakes, and you’re only one step away from buying a house. Avail quick and hassle-free home loan online with high eligibility, low home loan interest rates, and minimal documentation
Use an online home loan eligibility calculator and home loan EMI calculator to stay prepared. Apply for a home loan now.
A professional writer with over a decade of incessant writing skills. Her topics of interest and expertise range from health, nutrition and psychology.