Although getting a home loan is easy, due to the large amount of money involved in the loan, it becomes essential to be free from all errors and try to be thorough with each detail and nuances of the loan throughout the tenure. You should check the home loan eligibility criteria of the various lenders beforehand so that you satisfy all the parameters and make your report and make a strong case for your application. You must also keep all the documents ready that the lender might need for proof and verification. There should be no fake or fraudulent paperwork included, as it may lead to the rejection of your loan application.
All the steps in a Bank of India Home Loan application process require utmost care and caution. First-time homebuyers can make rookie mistakes due to lack of knowledge, and even previous homebuyers can be casual in their approach while taking a Bank of India home loan. Since the lenders keep updating and modifying their home loan schemes and offers, it becomes imperative to stay up-to-date with all the new information in the real estate market.
Following are some mistakes that new or old homeowners can make while availing a home loan:
Applying at too many banks/NBFCs: There is a record book that tracks each loan application you fill, whether or not that application is approved. It gives an impression to the lender that your application has been rejected by several lenders before and weakens your chances of getting a loan. Therefore, you need first to narrow down the best lenders offering the most suitable deal according to your budget and requirements. Only after proper market research and evaluation should you apply for the loan at a trustworthy financial institution.
Focusing only on the interest rate: Although the interest rate is one of the most crucial aspects of a home loan, keeping your focus only on that is not a wise decision. Lenders can offer lower interest rates to lure customers into taking loans with them, but they can impose several additional charges and hidden fees to compensate for such interest rates. The EMI can be low, but due to additional charges, your financial planning can be affected and can be a problem in the future. Therefore, you should check all the home loan details and read the loan agreement thoroughly to know about all the charges and penalties imposed by the lender.
Not clearing off existing debt: Before filing a home loan application, you must ensure no outstanding credit against your account. This can have a significant influence on your credit score and lower your chances of getting the desired loan amount and interest rate. The lender can judge the applicant's repayment capability by checking his credit history. Thus, improving your credit report before applying for a home loan should be a priority.
Taking more funds than your budget allows: You may be tempted by the thought of getting to purchase your dream house immediately through a home loan. But you need to keep in mind that this is the same money (plus the interest) that will have to be paid over the loan tenure at the expense of your savings and monthly income. Therefore, a proper repayment structure and separate allocation of funds are necessary before applying for a home loan.
Not taking Home loan insurance: Insuring your Home Loan in case of an eventuality is an empathetic and vital decision. Many banks provide the Home Loan Protection Plan (HLPP) facility so that the borrower’s family does not have to bear the expenses of the loan if the borrower and sole earner dies or has a chronic medical illness. The insurance company pays the outstanding loan amount, and the family does not risk losing the house.
Conclusion: Although everything cannot go perfect during such a long tenure of the home loan (25-30 years), there should be a margin for error so that any future investments and financial commitments do not suffer while keeping your savings safe in case of emergencies.