While you plan to buy a dream home, financial institutions assist you to meet the monetary needs if you are short of the required amount. Such loans though can be easily availed, have many hidden implications, and you must exercise few necessary precautions to get real benefits.
Owning a house is mostly everyone’s dream. You may wish to buy a home but may not have sufficient funds. Many financial institutions, non-banking institutions, banks, etc. offer loans to meet the need for such funds specifically. These loans are available at competitive interest rates with facilities such as quick processing of loan application, affordable instalments, etc.
Though these loans are readily available, still you must think carefully before opting for it. Avoid committing mistakes so as to not dilute the benefits you may derive by taking such loans.
- Finalising the lender before finalising the property
People who wish to take a Home Loan find what would be the loan amount which they may be entitled to take with their chosen lender. It may so happen that if you have already finalised the lender and then approached them with your dream catch, the lender may reject the loan application. There are many technicalities associated with a loan processing such as legal documents of property, stage of construction, the location of the building, etc. In case the lender decides to re-evaluate the property for any reasons, you may end up getting less than your requirement. So it is advisable to finalise your property first and then research the various options available in the market to avail the best possible loan.
- Not being able to arrange the down payment
The down payment is a large chunk of money to be paid to the promoter to book a property. If you are unable to arrange the down payment on your own, your lender may not give you the loan. The lending institutions before lending money assess your income statements, expenses, your savings and then analyse your capacity to pay off debt. If your savings are not enough to meet the down payment, it may turn out to be a deterrent for them to provide a loan.
- Borrowing more than affordability
The biggest mistake you may commit is borrowing more than your affordability. If your current expenses along with the expected EMI are somewhat equal to your current income, it may become difficult for you to pay back the loan against your home. In any situation, you should be able to generate some savings after paying your EMIs and post meeting your daily needs.
- Ignoring insurance cover
Insurance cover against the loan should be desirable. In case the borrower faces a medical emergency or unfortunately expires, it may become difficult for the kith and kin to meet the financial crunch. An insurance cover, whether it is for the loan or health protection or life insurance can take care of other expenses as well as EMIs in the case of death of the borrower.
- Not reading the fine print
The cumbersome yet important task is to read the fine print in detail. Many important terms and conditions are not explained clearly in the document which may lead to disputes in future. Getting into the details equips you against any such terms which you may not agree upon with the lending institution.
Most importantly, you should be careful enough to pick the best possible loan against your property so that you do not ever have to worry about the loan repayment or losing the ownership rights.