We do not always have enough money to meet all our needs. Hence, we have no option but to borrow to meet our needs. When it comes to buying your dream home, Banks and NBFCs bridges the gap between reality and aspirations. Now, choosing the right home loan product becomes much more important for many of us. Understanding Home Loan Tips and Tricks is important to shun unpleasing surprises later.
This blog intends to elucidate some tips and tricks to avail Home Loan and ensure peace of mind.
Home Loan Tips and Tricks
1. Avoid borrowing more than what you can repay
To put in simple words, smart borrowing is exceedingly essential. It is important that you borrow what you can comfortably repay. Most importantly, all your monthly EMIs put together should not be more than 50% of your monthly earnings.
2. Go for short tenure
Generally, Banks and NBFCs allow the maximum home loan tenure of 30 years. Now, the longer the tenure, the lower is the EMI. Subsequently, borrowers find it very appealing to go for a 25-30 year loan. Nevertheless, it is best to take a loan for the shortest tenure.
3. Home Loan Tips and Tricks: Ensure timely and regular payment
It is important to keep in mind that you need to pay your EMI timely. Even in an emergency, don’t miss paying your dues. Besides, you must take care that you never miss your loan EMIs. It will not only announce you as a defaulter but also spoil your CIBIL score.
4. Do not borrow to overdo
Undeniably, the basic rule of investment is to avoid borrowing money to invest. Indeed, there was a time when real estate was a lucrative investment. Housing loans were available at a lesser rate. However, things have changed. Hence, avoid borrowing a loan amount that goes beyond your capacity to service.
5. Go for insurance for big-ticket
Say you avail a large home loan, it is best to take insurance cover as well. To put in simple words, consider buying a term plan of the same amount. This will definitely, ascertain that your family is not burdened with the debt if something adverse happens to you. The lender will take over the asset in case your dependents fail to pay the monthly instalment (EMI). Hey! A term insurance plan will not cost you too much.
6. Home Loan Tips and Tricks: Keep shopping for economical rates
Different lenders charge different rates. You just need to keep your eyes and ears open. It is important to keep shopping around for the best rate.
7. Consider the additional charges
Besides processing fees, switch fees, administrative charges; a bank charges for foreclosure etc too. Therefore, you should confirm with the Bank / NBFC for all the charges that will be levied before you finally avail the loan.
8. Read the terms and conditions carefully
Meanwhile, the borrower needs to read the terms and conditions methodically at the very initial stage to avoid future hassles. Go through the home loan sanction letter carefully.
9. Know foreclosure norms
Most importantly, do your research on the various foreclosure criteria and the charges involved. In brief, shed light on the home loan foreclosure norms before you go for it.
To Sum up
Lack of information on the home loan process is a major reason why many face problems. Well, if you follow the above tips and tricks you will never find yourself caged in debt.
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