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Do what is right

Best tips on home loans


Home loans, undoubtedly, can realize your dreams but knowing how they work is the surest way to avoid tiff and lenders. So before you apply for one, here are a few DOs and DON’Ts we would like you to remember and protect your dream from turning into a nightmare.

Go for a pre-approved loan
Remove chances of last minute rejection of your home loan, because of what banks often refer to as a “minor technical aspect” that can leave you with no other choice other than switching to a private bank offering loan at a higher rate of interest. So it is always advisable to get a pre-approved loan if you are planning to buy a property in the near future. Not only will you get better rates but a sure and timely loan too. And you won’t miss the bus when you have finally found your dream home. Please note that a pre-approved loan is usually valid up to 6 months.

Read and understand the terms and conditions carefully
Even if it is a bulky document, read it thoroughly to avoid feeling cheated or fooled later. Sometimes lenders may nod to certain points but in the end only what’s on the paper is taken into consideration. So, don’t expect the company representative to educate you. Almost everything you want to know is easily available on the internet. Talk to your friends, spend some time online and do get acquainted with terms like EMI, fixed vs. floating rate, fault, BPLR, etc. This will help you in making an informed decision while buying a property or at least it will help you make a nice impression whenever the topic pops up.

‘Fixed’ may not actually mean fixed
If you have ever been in a loan conversation with a bank before, you must have heard the terms fixed rates and floating rates. Theoretically, fixed means the interest rate will remain constant for the entire duration of the loan. But always remember that fixed is never really fixed and only when you read the terms carefully, you will realize that the bank reserves the right to change the rate of interest after a fixed time period or in a given situation. So while you can’t really do anything about it, we suggest you keep some money aside (whenever you fix the EMI) for such surprises and spare yourself those sleepless nights.

Compare to get a fair deal
If those customer care guys have been bugging you too with lucrative deals, you will know that there’s a lot of variation in the rates being offered by different banks. But don’t just get caught up with the rate of interest. Loan period, processing fee, security cover clause and free insurance etc. should also be taken into consideration. So, do compare and negotiate and you will definitely get the best deal available.

No leap of faith
What we mean is never ever overstretch yourself financially or get overoptimistic about cutting down your expenses while applying for a loan. The bank will evaluate your creditworthiness but you need to be realistic at the same time. Make sure that your EMI is not exceeding 40% of your salary. Don’t exhaust all your savings and keep aside an amount for increase in EMI or other emergencies.

Being forewarned is being forearmed, so keep the above in mind and get the best deal for yourself.


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