There is no end to one’s desires and ambitions, everyone has them! When we think of investments we all want to invest in those things which will give us good returns or dividends and at the same time are risk-free. One option that matches this criterion is real estate; if you invest right then you can be assured of lucrative returns.
However with the ever-increasing price graph it is not advisable to buy a home from your savings only—so the second best option is to get a home loan. But at the same time you need to be wary of Home Loan schemes as they come with their own terms and conditions. You must be well aware of all the small clauses or you could end up paying more than you bargained for.
Some common misconceptions about Home Loans are listed below. They will be able to help you regarding common FAQs related to Home Loans:
Myth 1: One of the most common myths is that inflated interest rates correspond to an increase in EMIs. There is no need to cry out every time you feel the bank has increased the interest rate. This is one of the biggest misconstructions about home loans-when interest rates climbs, your EMI climbs, but that is not always the case. In line with the interest rate changes, the tenure may fluctuate over an interest cycle. Mostly, it is the tenure that is increased to keep the interest amount the same.
Myth 2: Another misassumption is that the deal with the best interest rate is the best. Dig deeper to find out if your lender is actually giving you a good deal. Check out other details like valuation charges, prepayment penalty and processing fee in addition to the interest rate so that you can evaluate all your lender options in a wholesome way.
Myth 3: A misconception is that home loan tenures should be short and you should try to close the home loan account as soon as possible. Most borrowers opt for short term loans to avoid repercussions from increase in repo rates by the RBI. Shorter tenure also means increases in your EMIs which mean you will be paying hefty instalments in shorter intervals to the bank. So, don’t go with shorter tenures as a thumb rule and tailor the loan to your comfortability.
Myth 4: A common misunderstanding is that a good credit score means assured home loan approval. Everyone with a good credit score is entitled to a loan is one fallacy that people have. A good credit score is one of the components that feature in your application and it helps you to get a positive point on your application, besides this there are a number of things a bank considers while assessing your application.
Myth 5: Another misinterpretation is that their loan is on a fixed interest rate, i.e. the interest rate will remain the same throughout the term of the loan. Borrowers feel that they are guarded against any fluctuations in the interest rate but practically all the home loans come with an ‘Interest Reset Clause’, so kindly read the fine print. Also, most banks offer a fixed rate for a certain period of time only and after that the interest rate becomes the floating rate.
Hence, always read your home loan documents carefully, even the small prints or take advice from a professional to make an informed decision rather than an assumed one while signing the dotted line.
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