The prospect of buying a dream home is so exciting, that sometimes we end up making mistakes that cost us later. You don’t want that happening to you, right? Well, what is Regrob here for!
We don’t want you to make such mistakes, for they are irreversible and you will have to live with them. So this is why we are here to warn you and save you from all the trouble, because we like putting a smile on your faces. Read on to know about the common mistakes made by borrower while taking a home loan and make sure you avoid these.
Not doing their homework properly
Yes, we’re talking about you. If you don’t do your homework properly, you will end up getting punished for it. Same happens when you take a home loan. If you do not research your options thoroughly, it is unlikely that you will strike gold, in this case the gold being your home loan deal.
Speak with different lenders, ask questions, and be active in the process. Evaluate the interest rate especially, this is the main factor of the loan. Know the amount of time the bank takes to disburse the loan. Read all the terms and conditions very carefully. In the age of smartphones and google, don’t let anyone fool you. Go home and cross check every piece of information conveyed to you.
A lot of times it happens that borrowers interact with third party agents of the home loan provider who promises the stars and the moon to the borrower in order to achieve his personal targets. Do not just give in to the fantasy, please verify with your bank and only then sign. Once you sign, you cannot do much about it later. So be vigilant, cross check the details, and make an informed choice. One special piece of advice from Regrob would be to never take your home loan from the agent of a builder, for he will always paint a rosy picture which might not be true.
Borrowing more than you might be able to repay
It is yet another terrible mistake made by borrowers to borrow an amount over and above what they can actually afford. Banks determine your eligibility amount by looking at your income and existing liabilities and then they grant the loan. They do not take into consideration your existing expenses, and this is where trouble might begin.
If your existing expenses are high and on top of that you take a loan which results in a high EMI payment every month, you may end up in a financial crisis. Therefore, it is always better to evaluate your budget and lower your loan amount if your current income and expenses levels are not promising.
Do a simple calculation of all your fixed monthly expenses. Add this to the amount of EMI on your planned home loan. If the total expenses are way too close to your monthly income levels, then it means you should settle for a less expensive property. It is suggested that all EMI commitments should be less than 40% of your monthly take home salary. This will keep you in a safe spot.
Opting for a home loan scheme that is not in accordance with your needs
There is too big a variety available these days for home loan schemes. One of the essential features here is understands the difference between schemes that offer fixed rate of interest and floating rates of interest.
The name makes it sufficiently clear. A fixed rate means the rate of interest on the loan is pre decided and will remain constant throughout the term of the loan. Whereas a floating rate of interest means it is subject to changes with respect to change in market conditions. While a scheme with a floating rate of interest may look attractive to the borrower to due low initial rates of interest, they will be in for a rude shock when the interest rates start shooting up. They might make your loan so expensive as to land you in a financial crunch.
If you are unable to pay the high EMIs, you might lose the ownership of your property too. So Regrob suggests that you research your options very well before making a commitment and ensure that you have made the right choice.
Not reading the home loan document thoroughly
We cannot emphasize enough to you how important it is to read your home loan document before putting your signature on the dotted line. Once signed, you will not be able to back out or claim wrongdoing on the bank’s part. Most of us are lazy when it comes to reading these legal documents, because well, they seem boring.
However, when a sum of money this large is involved, you better read the document carefully. Ask questions to your bank if you have any, and be clear about the deal you are getting. Click here to read about home loans terms & conditions of various banks
Not taking an insurance cover
Life is uncertain. Your actions should be such that in unforeseen circumstances, you do not leave your family struggling. The home loan you take for their dream home should not be a burden on your family, in case something unfortunate happens to you during the term of the loan. Most borrowers do not identify this risk. Hence, they do not take an insurance cover on the home loan.
Even if you do not want to take a home loan insurance, you must at least have a pure life cover that includes coverage for your home loan and other liabilities. This will provide monetary compensation to your family in the event of your unfortunate demise, and they can use this amount to pay off the loan.
It is also suggested to take a personal accident cover and critical illness cover. These insurance policies help in covering a part of the loan, in case of a temporary or permanent loss of income due to unexpected events in your life. Your family should be safeguarded against such risks. Click here to read about home loan insurance
So these were the common mistakes made by borrowers when taking a home loan, which Regrob is sure that you won’t make. For any more assistance, you have us!
Kindly give your feedback in comment box
For More Information Call Us:-9529331331