Buying a home is one of the most important decisions of your life. It requires meticulous planning and dedication. Any carelessness on your part can result in disaster. There are a number of financial institutions that offer a variety of home loan options. However, since you’re spoiled for choice, picking the right scheme can be complicated. There are several financial institutes, such as Bajaj Finserv, which offer Home Loans at rates as low as 9.85%.

While you are trying to get the best loan deal possible, you need to understand that a sloppy move could lead to a financial crisis.

Here are a few common home loan mistakes to avoid:

Lack of Research

Enjoy window shopping? You will need to do it with home loans, only on a much larger level. Stop relying on friendly recommendations and explore all the different interest rates available to you. Also acquaint yourself with the different fees charged by different banks, such as prepayment fees, processing fees, valuation fees, legal fees, and other hidden charges. This can go a long way in helping you with your investment.

Closing an Old Loan Account

Many financial institutions have access to very little information on you, apart from the few documents you provide them with. This is where old loan accounts come into play. For instance, if you have an old credit card with a clean repayment record maintained, this can help you gain the confidence of your lenders. A clean track record can be taken as proof that you are a reliable and can be trusted with a loan.

Falling Prey to Teaser Loans

Many banks in India have come up with a rather enticing concept called “teaser loans”, where these institutions charge unusually low interest percentages on your home loans for the first few years. These repayments will gradually increase over the course of your tenure. This gives you a false sense of security.

Taking in More Than You Can Handle

You may think that going a little overboard with your loan amount will not matter in the long run. Lenders usually consider the maximum amount based on your income and other liabilities. However, they don’t consider your current expenses. If you have an increase in expenses on a monthly basis, and you have opted for a larger loan, it could result in a financially critical situation.

Buying a New Line Of Credit

You need to understand that incurring fresh debt or taking on any other loans can foil your plans to buy that dream home. This has a direct effect on your loan eligibility.

Setting up a home is a lengthy journey, which financiers like Bajaj Finserv can assist you with, thanks to their easy online approval services. Though you may face a lot of problems along the way, the process becomes much simpler once you understand the mistakes to avoid while applying for a home loan.

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