Since home loan is a long-term financial commitment, the choice of selecting the best suitable home loan is the most crucial decision, which if taken correctly can save money in both short term as well as in long term. But there are these few common mistakes usually committed when it comes to availing a home loan.
1) You forget to make comparison of offers
You believe that with the lowest interest rate and zero processing fees from one lender- Bank/NBFC/HFC, you have got the best deal on your home loan. The deal can’t be the best deal unless it is not compared with the other from various lenders. It is therefore important that you compare the offers from other lenders as well before availing a housing loan.
2) You forget to select the correct product
You select the wrong product for yourself due to lack of awareness on the availability of the different home loan products namely, fixed interest rate home loans, floating interest rate home loans, home loan with overdraft facility, smart home loan product, etc. You have to select the appropriate loan product according to your requirement or else you will land up taking an incorrect loan resulting in paying a higher rate and charges & finding it difficult to repay later on.
3) You forget to read the fine prints, terms and conditions of the home loan
You feel happy when you have bargained the best deal. But most often you forget to read the offer documents, forms, bank agreement and their policies-terms of conditions. It may be tedious and exhaustive to go through long pages of loan agreement but it is important that you know the bank clauses and terms and conditions with respect to home loan charges, instalments, rate change, notifications, hidden costs, etc. which if overlooked may cost you later.
4) You blindly make signatures
You make blind signatures on the forms as suggested by the lender’s representatives without knowing which form you are signing. The forms contain the clause of cross selling other bank products such as property insurance, compulsory account opening, credit card selling, etc. Your blind signatures give your consent of acceptance that authorises the lender to cross sell.
5) You forget to get acknowledgment copy of your documents submitted
You never kept track of and demand acknowledgment for original property documents submitted to the bank or to its representatives. Ask the senior if the representative has no power to give you the receipt of acknowledgement. Take email confirmation from the authorized manager of the lenders for the receipt of your all-original documents.
Click to know the detailed list of documents required for applying for a home loan.
- Home Loan Resale Case – for salaried, for self employed for Proprietorship firm, Private Ltd. Company, Partnership Firm.
- Home Loan Builder Case – for salaried, for self employed Proprietorship firm, Private Ltd. Company, Partnership Firm.
6) You forget to take written commitments from the banking representatives
Verbal commitments are not usually honoured by the representatives. You should insist on having a written communication with the concerned representative of the lender. Take email confirmation on the loan process, implied charges, loan sanctioned and disbursement process, turnaround time, special discounts, offers, rate of interest, documents required and documents submitted, etc.
7) You do not have own contribution funds for OCR
You do not have sufficient own contribution to pay towards OCR / down payment for loan. You expect the bank to over-fund for your shortfall amount of OCR or to cover the cost of GST in the loan amount.
Also, you must know the banking guidelines on loan funding according to which the lenders will not disburse the loan unless you make the OCR payment/down payment.
8) You take loan for short tenure
You keep your repayment term low to save on the interest and land up paying higher EMIs, which at times become difficult to repay and you land-up paying penalty to the lenders along with the delayed EMIs. This also impacts your CIBIL score.
Home loans come with a maximum tenure for up-to 30 years with nil pre & part payment charges. Hence even if you take a home loan for maximum tenure and repay it early you do not have to pay any penalty.
9) You switch to become self-employed from salaried
If you are self-employed, you need to submit a business continuity proof with a minimum business vintage of 3years to 5 years. So, when you switch from salaried to become self-employed you overlook these banking policies thereby facing assured rejections of your home loan applications.
10) You don’t study your savings evaluation
You keep high credit card dues and expensive personal loans instead of closing them with cheap top-up loans. You fear the burden of the extra closure charges and forget to evaluate the savings which can be made from availing the cheap top-up loans. The cost to avail the top up loan and the rate of interest for the top-up loan is cheaper in comparison to the heavy financial charges on credit cards and high interest rates of personal loan.
Loanfasttrack is a Mumbai based loan provider company since 2015 offering loan services in Mumbai on– housing loan in Mumbai, mortgage loan in Mumbai, personal loan in Mumbai, business Loan in Mumbai, unsecured business loans,home loan transfer, top-up loans and loan transfers. Loanfasttrack is a direct sales associate with leading banks namely, ICICI Bank, HDFC Ltd, Canara Bank, Citi Bank, Piramal Housing Finance, etc.
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