Buying a house is a significant achievement in any individual’s life. Property prices can get expensive, which makes the decision of a house purchase a huge commitment. What most people do is rely on home loans to secure the funds that they need to cover the purchase. A home loan can be helpful as it can cover about 80-90% of the property value, and lenders usually offer 20 years to repay the loan. This gives borrowers an ample amount of time to comfortably clear the loan in EMI payments.
However, there are a few myths that have always surrounded home loans, and it is very important to be aware of them before applying for one. This is to ensure that a good deal is not missed out on simply because of the fact that you believed something, which is not true.
So, let us take a look at 4 of the most common myths about home loans:
- Borrowers should only focus on home loan interest rates
While the home loan interest rate is definitely an aspect to be focused on, it is not the only one. There are several factors that you need to take into consideration before applying for a home loan. You also need to be checking whether the repayment tenure is suitable, whether the EMIs are a good fit for your budget, whether the loan amount is sufficient, and so on.
- Financial institutions only evaluate credit scores before approving loan applications
This is again not true, as there are numerous other factors that financial institutions evaluate before approving a loan application. Apart from an applicant’s credit history, lenders also go through their age, monthly income, job stability, existing debt obligations, employment record, property location, and so on. All of these factors play a role when it comes to a home loan approval.
- Borrowers should always go for short home loan repayment tenures
While it is true that there are benefits to repaying a home loan in a short repayment tenure, it does not necessarily mean it is the best option for every borrower. Do keep in mind that choosing a short repayment tenure means that the loan’s EMIs would be high, and this could result in lesser savings every month. So, before you apply for home loan, focus on finding a tenure where the home loan’s monthly instalments can be conveniently paid off without any financial struggles.
- Interest rates offered by lenders are non-negotiated
Many people believe that a housing loan interest rate is set in stone and cannot be changed. However, this is just not true. If you are not satisfied with the home loan rate being offered, feel free to get in touch with the lender and negotiate for a better deal. By improving your home loan eligibility, it is possible to get the lender to offer you a lower interest rate on the home loan.
Lastly, it is advisable to use a home loan EMI calculator, as this will help in understanding the loan’s EMIs beforehand. You can then decide whether to go ahead with the loan plan or look for a better option.