If you want to fulfill your dream of a new house in the new year, then you must be thinking of taking a home loan. Whether you have already saved or are saving, in today's market you will need to take a home loan. But homebuyers often make some mistakes regarding housing loans, which increases the burden of installments on their head or they lose the benefits that they could have availed. We are telling you some of the common mistakes that homebuyers often make while taking a home loan.
Out of budget
The first mistake people make is that either they are not able to make their budget properly after looking at the market or they go beyond their budget. You should be financially prepared in advance to buy a house. This should be the first thumb rule for buying a house. Buying a house is a big investment, so it will require equally big preparation. Generally, banks ask you to make a minimum down payment of 20% on the home cost. You should start with at least 40% saved. Finally, ensure that your home loan installment i.e. EMI does not exceed 35% of your take-home salary.
Attractive offers on interest rates
Often banks offer low interest rates on home loans. Offers on interest rates also keep coming according to the season, seeing these you may be attracted to apply for a home loan. But homebuyers forget that the interest rate being offered on this offer will increase later. Along with this, you should also calculate your expenses regarding processing fees, legal fees, prepayment fees, etc.
No backup
The goal of your financial planning before taking a home loan should be to create an emergency fund. The thumb rule is that if an emergency arises, you should have a backup of your expenses for at least the next six months, you can increase it further. Apart from this, if you do not have life or health insurance, then get this done first so that you do not have to face problems in case of any medical emergency while you are paying the home loan installments.
Do not negotiate with the bank
Not negotiating while taking a home loan from the bank can harm you. Banks often reduce the interest rate after a little negotiation or give a discount on processing or other similar fees. In such a situation, asking for a discount on a loan or other fees can be of some benefit to you.
Be it a home loan or any other type of loan, banks check your credit score. The higher your credit score, the lower the interest rate can be. Before applying for a home loan, definitely check your credit report, if there is any mistake in it then get it corrected. Keep your total credit below 30 percent. Also, if you have taken any other loan, repay it timely, so that there is no negative impact on the credit report.
PC Social media
