Everyone needs home loan at some or the other point. While it’s necessary to get an home loan if you want to buy a home of your own the process around it can be a bit cumbersome if you don’t know the pitfalls. So, here are some of the mistakes home loan applicants should avoid before making an application.
1. Insufficient down payment
The first mistake home loan applicants should avoid is to accumulate insufficient amount for loan down payment or margin contribution. This will lead to lower down payment and higher interest rates, which may not be convenient for you in the long term. To get an accurate estimate of how down payment affects your loans try to use a tenure calculator as that will show you how paying a larger down payment can significantly impact your loan tenure. Always remember that the amount required for down payment is decided by your lender and not by you. It is important to have a minimum of 20% of the total home loan amount as a safety net in case you need more funds later on. If your down payment requirement is less than 20%, then you may opt to increase your monthly installment instead of making a bigger initial investment which could result in high interest rates and larger monthly payments in future.
If your income is less than the loan amount, then you need to have some savings in the bank to make a down payment. If you don’t have any savings and want to buy a house with a small amount of money, then it’s not possible.
2. Check your home loan application before applying for home loan
In most cases, people don’t take into account their credit score when they apply for a home loan. They just make a quick decision based on their income levels or affordability criteria and move on with their lives without realizing that there are other important factors that can impact your ability to get approved for a mortgage loan. Take time out and review your credit score before moving forward with your home loan application so that you don’t end up paying more or worse off than what you started out with.
Hence before applying for a home loan, it is advisable to check your credit score and history online. It will also help you know what type of loans are available in the market and how they compare with your own financial situation.
You can also take an approval letter from your bank before applying for a home loan so that they can assess your credit score and provide you with an approval letter accordingly. Make sure that all required documents are ready before applying for a home loan so that you can submit it at the earliest possible time without any delay or complications!
3. Not examining EMI affordability
One of the most important things to look at when applying for a home loan is how affordable your monthly EMIs (equated monthly instalments)
are. You can also use a emi to tenure calculator to get accurate numbers.
It’s important to get this right because it can affect how long it takes for your monthly repayments to drop once you’ve started paying them off. Even if a loan allows for higher EMIs than others, if those higher EMIs aren’t affordable for you and your situation, then it makes sense to look at cheaper options. This is especially true for those who are looking for long-term loans with low upfront payments or minimum down payments because these can impact your monthly expenses significantly over time if you don’t manage them properly.
While it’s true that you want to shop around, you also need to be careful not to compare apples with oranges. Different lenders offer different products and services, so if you are already in the market for a mortgage, it’s best to go with one lender for all your needs. However, if you have no idea about what options are available to you, then it is advisable that you shop around before signing anything. This will ensure that you get the best deal possible on your new home loan
