PMAY subsidized rates of interest and tax incentives have buoyed house loan demand quotient to an all-time high. However, potential applicants need to understand the financial gravity of availing home loans considering that it is a high-value advance and a long-term financial commitment. A few common errors that individuals make when they opt to apply for a housing loan that includes –
Opt for a financier without comparing
Thanks to the growing competition amongst reputed HFCs, potential borrowers can now choose between multiple home loan products. Under such circumstances, it is essential to compare lenders and make sure to check up on the following aspects of their preferred home loan –
- Offered loan amount.
- Rate of interest.
- Required credit score.
- Additional charges.
- Loan balance transfer facility.
- Top-up loan, etc.
Apply with a low credit score
True that mortgage advances do not require higher CIBIL scores. However, holding a credit score of 750+ ensures that the borrower has negotiation powers to yield better deals on the availed financial product.
Make a minimum down payment – A lower down payment could increase the Loan to Value, and thereby make the lender less willing to provide the requested loan amount. On the flip side, making a higher down payment would lead to preferable repayment tenor and hence, affordable EMIs for the same reason. Note that interest rates on a loan will depend on the risk and liability weightage on a home loan.
Borrowing more than what is required – In case of home loans, lenders are more than willing to provide an advance of up to Rs.2 crore considering that they have the reassurance of repayment courtesy the mortgaged property. However, borrowing more than what is required ensures uncalled-for financial burden.
Opting for a shorter tenor – While availing loans, take into account the chances of unforeseen financial strains and hence opt for longer tenor, thereby reducing the chances of defaulting. In case you come upon some additional funding, you can always part-prepay or foreclose accordingly.
Remember, avoiding the above errors while you opt to apply for a housing loan and adopting suitable repayment measures ensures that your CIBIL score gets boosted significantly too.
Additional Read: Get a Home Loan Easily By Following This Guide
