One of the most critical steps in the journey of getting a home is arranging finance for such a huge investment. As a result, many people end up applying for a home loan. It’s a cumbersome process that takes up much of your time and energy. But before you start the process, take a moment to reflect on your actual requirements. Do you need an expensive home, or can you compromise with a smaller home within your budget? How much money do you have in savings, and how much do you need as a loan? Are you even eligible for a home loan? Once you have the answers to these questions, you’re ready to apply for a home loan.
In this blog, we’ll discuss some common mistakes that homebuyers make while taking a home loan.
Choosing the Right Lender
You’ve found your dream home; the next step is to figure out how much loan you’re eligible for. While it’s important to know your eligibility, finalising your lender at this stage might not be the best idea. Most banks offer loans for under-construction or ready-to-move-in properties with approved builders and projects. However, your loan application may be rejected if the property is unapproved or has legal issues. It’s best to select a property first, check all legal documents and authorisations, and then apply for a loan. This way, you’ll have a clear idea of your loan eligibility and avoid complications later on.
Not Ready With A Down Payment
Don’t assume that the bank will take care of the down payment. Lenders always check your savings and funds before approving the loan. If you plan to borrow from family or friends, be prepared to show the details of the amount you’ll receive. But don’t worry; you can still get the best deal by negotiating with the bank. Remember, the interest rates depend on your repayment capacity, so make sure to negotiate well. You can also try to negotiate processing fees, legal fees, and other hidden charges. You can save money and get a loan at a lower interest rate with little effort.
Fixed or Floating Loan
A fixed interest rate stays the same throughout the loan’s tenure, regardless of any changes in market interest rates. In contrast, a floating interest rate changes with the market interest rates, which can go up or down depending on the RBI’s decisions. If you’re planning to repay the loan in a shorter duration, such as five or seven years, a fixed interest rate is an excellent option. However, for loans with longer tenures, such as 20 years or more, a floating interest rate is preferable as it is challenging to predict interest rate changes over such a long duration.
Not getting insurance
Insurance coverage can protect you and your family in an emergency or if something unexpected happens to you. With a life insurance policy, your loved ones can take care of other expenses if you pass away. With a health insurance policy, you won’t have to worry about medical emergencies draining your savings. So, before applying for a home loan, explore insurance options and protect yourself and your family.
These are some of the common mistakes that almost everyone makes while getting a home loan! Remember, with proper planning and careful consideration, you can turn your dream of owning a home into a reality. Whatever you do, make sure you get a house from a well-reputed developer such as Raymond Realty, who can potentially help you with the home loan process. Many well-done projects like Raymond Realty Ten X Habitat are in demand that you should definitely check out. The thoughtful design and variety of amenities ensure that everyone can find their own space and engage in activities that bring them joy and fulfilment.