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Once you've finally made up your mind to buy the property you've been eyeing, or even better – the dream home for your family that has been on your bucket list for far too long, your journey from here on has the potential to be extremely smooth and hassle-free. Starting from your property selection to arranging the funds for both your down payment and the rest of the payment, the homebuying journey has been significantly eased for the benefit of prospective buyers.
It's widely acknowledged that buying a property without the help of a home loan can be difficult, even for those of us whose savings are substantial. Breaking the bank in one clean sweep may jeopardize your finances or leave you in a difficult position in times of emergencies, which is why seeking a home loan is a practical way to fund your real estate purchase. Not only do you have ready funds available, but the home loan borrowing journey too has become easier for homebuyers with the advent of process automation and digitisation. However, to ensure that the process stays smooth sailing, there are certain home loan blunders that applicants should steer clear of.
These common home loan errors are often looked over and can cost you dearly—halting your home buying process or saddling you with unfavourable borrowing terms. These errors are easily avoidable and with the right amount of time invested, applicants can expect to get easy approval and disbursal of the home loans if their home loan application is error-free. To learn more about how you can best optimise your home loan application and make it error-free.
Mistakes That Can Limit Your Home Loan Prospects
Here are some common mistakes most home loan applicants tend to make without realising their impact on their home loan application. However, recognising and rectifying them in time can save applicants from home loan rejections, and even secure loans at competitive rates. Take a look to learn more.
1. Insufficient Home Loan Research
One of the major roadblocks to a smooth home loan journey is insufficient research. Aspiring home loan applicants shouldn't jump at the first offer and should spend time evaluating their current home loan eligibility and, subsequently, lenders who match their needs. Various lenders have varying sets of eligibility, and if mapped correctly, applicants will be able to choose the right lender who is most likely to offer favourable terms and speedy approval and disbursal.
2. Insufficient Funds for Down Payment
Prospective homebuyers should know that no lender is permitted to fund the entirety of the property's value as a home loan. The Reserve Bank of India dictates that home loan lenders offer only up to 90% of the property value as a home loan, which leaves the buyer to fund the remaining amount, often known as the property down payment, themselves.
It bodes well for applicants if they're able to fund this portion of the property price themselves, as it projects them as someone who has adequate liquidity and savings, in the time of need. Aside from this, by choosing to pay off a heftier sum as down payment, one also reduces their home loan amount, subsequently, their total cost of borrowing.
3. Not Using Home Loan Calculators
Calculator tools such as a home loan EMI calculator mobilises better financial decisions when it comes to applying for a home loan. Such tools are hosted online and are free for all, with no cap on the number of times one chooses to use it. Home loan calculators can help you determine the following aspects of your home loan application, amongst other things –
- Your ideal home loan principal amount
- Your ideal home loan repayment tenor
- Your ideal home loan EMI amount
- Your home loan eligibility
The three points above are the cardinal rules of applying for a successful home loan. Ensure you have gone through all three steps before you apply for a home loan.
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