4 Basic Yet Biggest Home Loan Mistakes You Must Avoid!

Home loan funds you to buy the dream home for you and your family. But it’s equally true that most of the buyers don’t consider its important points, thereby ending up with the higher interest rates and hidden charges.

Since borrowing money for buying the home is one of the crucial financial decisions of your life, you can’t be laid back about that. These are the common mistakes you should avoid while taking a home loan.

#1 Not Doing Homework:

Doing research about home loan options comes handy and helps you choose the best option. Unfortunately, this step is skipped by many home buyers. You may find your bank’s deal good on housing loan, however, you may research about other home loan options available at other banks. Besides interest rates, get the details of other applicable charges like processing fee, MODT charges, and late payment fees. Also, know the loan sanctioning time of the banks.

Besides meeting lender’s representative, you can ask your friends who have taken home loans. In this way, you can save on the expenses regarding interest rates and various hidden charges as well.

#2 Not Reading the Fine Print:

Most of the homeowners don’t read agreement details and clauses while signing it. Yes, 4-5 pages long agreement may be boring and exhaustive to read but it contains some critical points and conditions regarding charges, installments, notifications, and amendments. It may be possible that a bank representative may have skipped these details in his oral discussion with you. Always remember things is writing has more weightage! Therefore, never skip the details mentioned in your agreement and take bank representative help in understanding the tricky points. It helps you not only understanding the lender’s policies but also clarifies your doubts before signing.

#3 Not Negotiating on the Rates:

Don’t flatly accept the terms and conditions of the bank as it can be negotiable. Your negotiation skill can get the home loan for you on better rates by trimming the extras. First of all, shortlist 4-5 banks after knowing their interest rates and other policies and let them compete for your loan. For example, if ABC bank offers home loan at a good rate, you can tell XYZ bank to try and match it. Besides, you can ask a bank to lower the processing fee. Experts recommend group bargaining! For example, you and your friend want to buy flats in the same building, try to get a loan together. And the bank wouldn’t miss on the opportunity to get the bunch of customers together.

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#4 Not Shopping the Insurance Cover:

If you are the main breadwinner in your family, you can’t afford to skip the insurance cover. A home insurance policy is very helpful to cover the loan liability, in case any unfortunate incident like death occurs. In this way, your family will be saved from the upcoming financial crisis when you’re not around. If you’re not willing to opt for home insurance, you can buy life insurance policy covering your home loan amount to some extent. Besides, you can take a critical illness policy and accident cover.

So, these are the mistakes you must keep out of the deal by carefully planning and knowing the home loan options.