In the wake of rising income levels and living standards, an increasing number of people, particularly young people, are looking for home loans to help them purchase their dream homes by providing Pan Number for Banks. In the course of their search, some of them are frequently misled by the misconceptions that surround housing loans. If you are going to purchase a home, ascertain that you do not fall victim to any of the myths listed below while applying for a home loan:
Select the shortest loan repayment period to close the loan as quickly as possible
Many people who are considering taking out a house loan believe that they should choose the shortest feasible loan term in order to conclude the deal as quickly as possible. However, by doing so, borrowers place a further strain on their financial situation, as a shorter loan period entails a higher EMI payment. Greater EMI repayments may result in a significant reduction in your monthly earnings, and a higher FOIR may have a negative impact on your prospects of receiving a loan approval (Fixed obligation to income ratio).
If possible, borrowers should choose lengthier repayment terms in order to make comfortable EMI payments, and if they have excess cash, they should consider prepaying their house loan in part or in full whenever they have excess funds.
Interest rates are not negotiable under any circumstances.
For some reason or the other, lots of borrowers still hold on to the misconception that the interest rates offered by mortgage lenders are non-negotiable. This isn’t the case at all. If you are dissatisfied with the interest rate that the lender has quoted you, you may be able to bargain with the lender for a lower interest rate, provided that you have a valid reason to believe that you are being unfairly treated. You might negotiate with your lender to cut your interest rate and give better service terms if you have a good credit score or a strong repaying capability. You may also explore switching lenders if your current lender refuses to work with you on a solution.
Consider using online financial portals to negotiate a better deal and find the appropriate lender to provide details of your Pan Number for Banks when taking a home loan. These platforms allow you to easily evaluate and pick among the numerous lenders that are available, thereby assisting you in selecting the most appropriate lender for your needs and financial situation.
Blindly choose the lender with the lowest interest rate.
With interest rates on house loans starting around 6.5 percent, the interest rate is unquestionably one of the most important considerations when selecting a lender for your home loan. However, it should not be the only aspect considered while making such a decision. There are many borrowers who naively choose the lender who offers the lowest housing loan rate without considering other variables such as the requirement of Pan Number for Banks, services offered (for example, additional top-up loan facility), maximum tenure, and payment modes, among other things. When selecting a lender, make certain to consider all of these considerations and to choose the lender who provides all of these services while also charging a lower interest rate than the competition. In some cases, a lender giving a slightly higher interest rate than a lender offering a lower interest rate may also be providing extra services and better terms of service than a lender offering a lower interest rate in the same situation.
A good credit score guarantees getting a home loan.
Many consumers are under the impression that having a higher credit score will automatically result in them being approved for a house loan for sure, especially if their KYC through Pan Number for Banks is done and the loan is under process. Although having a good credit score increases your chances of being approved for credit, it does not ensure that you will be approved. Your house loan application’s approval will be influenced by a variety of other characteristics, such as your age, your income, your debt to income ratio, your job and employer’s profile, and so on.
Before applying for a home loan, it’s a good idea to check your loan eligibility using an online loan eligibility calculator, which can be found on major financial markets’ portals. These assist the borrower in determining whether or not they are eligible for the loan, so removing the need to submit an application and wait for a response from the lending institution.
Foreclosure and prepayment involve penalty impositions by lenders.
Another common misconception about house loans is that lenders may take your Pan Number for Banks but still impose heavy fines and costs on borrowers who prepay their loans or default on their mortgages. This is not correct. According to the Reserve Bank of India’s directives, lenders are prohibited from charging any prepayment or foreclosure fees on floating rate house loans. Such fees, on the other hand, maybe imposed on fixed-rate house loans, the amount of which varies from lender to lender.
An increase in interest rates directly translates into an increase in monthly instalments.
When the Reserve Bank of India raises interest rates, many home loan borrowers’ first reaction is that their existing home loan’s EMIs will automatically increase, causing them to experience financial difficulties on a monthly basis. This is simply a misunderstanding. When interest rates are raised on loans, lenders typically offer to prolong the loan term in order to avoid an increase in your monthly instalment payment. However, because extending the loan term results in an increase in the total amount of interest paid, borrowers should pay the higher EMI if they are able to do so.
Furthermore, the increased interest rate will only become effective after the conclusion of your home loan’s reset term. Existing borrowers can also take advantage of the home loan balance transfer option if they are convinced that they would save a significant amount of money (through a lower interest rate) as a result of making this decision.