Buying a home loan is a crucial task for every home-buyer. The borrower needs to re-pay the home loan on time to avoid the penalty being charged by the bank or financial institution. If the buyer defaults on loan, he/she may have to surrender the property to the borrower. The borrower should ensure that there should be a stable future income shortly and re-pay EMI on time. There should not be any delay in EMI payments to avoid being penalized or let the CIBIL score get reduced.
Buying a home loan helps buyer purchase their dream home at an early stage. There are plenty of banks and financial institutions that provide loans to the client at attractive interest rates to opt for loans. The loans can be taken in two different forms, such as the fixed interest rates as well as floating interest rates of the banks. The bank’s floating interest rates are better recommended rather than opting for fixed interest rates as the Reserve bank of India is reducing the interest rates for loans as well for the fixed deposits by reducing the repo rates of the bank.
Following are the key essential points to be taken into consideration while opting for home loans:
Maintaining sufficient balance:
The borrower should maintain a sufficient bank balance in the bank account so as to have safety against the loan repayment liability. The borrower should spend carefully while the EMI are going on as it is a very necessary liability on the borrower in order to make the property wholly-owned on an applicant’s name. The loans are taken by the borrower so as to end up spending the whole funds into buying the property or to buy a dream home at an early age by opting for the EMI’s as well as for availing the tax benefits on payment of income tax.
Ensure good ratings to the CIBIL score:
The borrower should maintain a habit of paying the credits on time like the credit card bills, insurance premium, loans on car loan, personal loans, home loans, post-paid connection bills on time. Thus a good or excellent score can lead to easy approval of loans.
Ensure Consistent Income:
The borrower should ensure that there should be consistent income running while opting for the loan, as in case if the borrower fails to repay the loan, then, in that case, the borrower may face certain financial problems. In the case of business, the applicant should understand the future predictions of the markets in order to understand the long-term sustainability of the project.
Following are steps that the applicant should avoid while opting loans:
Ensure a reputed borrower while opting for loans:
The borrower should ensure that the loan should be availed from a proper and trusted borrower only as some borrowers may sometimes have a very bad reputation in the market which may carry out malpractices such as misleading the buyers in case of verbal communication with the borrower by the bank executives while pitching for the loans. Also, the lender may sometimes over-charge the borrower in case of processing fees, application fees, etc.
Ensure the track record of the borrower:
The borrower should ensure to check the past track records of the loans being disbursed to other people and should do a thorough survey on the experiences being shared of the borrowers on the third-party websites. There are chances that some of the NBFC [non-banking finance companies] or the private lending banks are most vulnerable to carrying out malpractices in helping secure loans from the bank. If in case if the borrower gets to see the negative remarks of the financial institution, then he/she should not opt for the loans from such banks.
Ensure the financial balance sheet of the bank:
The borrower should also check the financial statement of lending institution so as to ensure that the institution is having sufficient balances and isn’t running into a financial cash crunch. Otherwise also it is never recommended to opt for the loans from such institutions as if the organizations may get debt ridden then the borrowers may not be able to clear the titles of the loan and hence may not be able to sell the property.
Check the un-ethical practices being followed by the company:
In case of a delayed payment of the loans by the borrowers may sometimes be harassed by the recovery agents who may resort to any of the mal-practices relating to the harassment to the borrowers, threatening the borrowers, or in certain cases, physical harassment or mental harassment being done to the borrowers.
Reading the proper terms and conditions of the loans:
The borrower, before signing the clause, should read the terms and conditions while opting for the loans thoroughly in case of the principal amount being taken by the borrower, interest being charged, final repayment amount to be returned to the lender, including the principal amount as well as interest amount. Sometimes there could be misleading charges which can be taken from the borrower, which can be overcharged like application fees, processing fees.
Thus we can conclude that the borrower should check the terms & conditions of the loan documents so as to avoid any future complications being faced by the borrower. Also the applicant should ensure the lender does not resort to any unethical practices which can be termed as illegal and are restricted as per the government guidelines.