There are plenty of misconceptions revolving around home loans, like other financial resources. The problem arises when applicants fall victim to these misbelieves and make the wrong financial decision. Therefore, it is important to know the facts and the prevalent myths about home loans to have the most informed decision when taking a loan from financial institutions. Here are some of the most popular myths about home loans that you should be aware of.
Myth 1: Home Loans Accompanied By the Lowest Interest Rates Are Incredible
A common misconception that prevails everywhere is home loans with low-interest rates are considered the best. But, the reality is different. If your home loan provides you with a low-interest rate and asks for a prepayment penalty or a legal reckoning fee, you may end up with an overpayment for a so-called low-cost home loan.
Therefore, it is advisable to cautiously go through the fine print toensure zero hidden charges are applied to your home loan. Before picking one lender straightaway, compare the available options to choose the best housing loan.
Myth 2: Banks Hardly Consider the Applicant’s Employment Status
In recent times, this is one of the myths that can mislead applicants. Financial institutions, especially banks, are fully concerned about the borrower’s employment status. The applicant is bound to showcase his/her employment standing, retirement plan, and unemployment stage to help the lender decide on giving a loan or not.
The present clause of most home loan applications states that if the borrower doesn’t clear out the debt amount within the stipulated time, his/her current employer will be accountable for paying the outstanding.
Myth 3: High CIBIL Score Ensures Getting a Home Loan
Another misconception is that a credit score singlehandedly can help you get your intended SBI home loan or from any other lending institution. This is a wrong notion! Banks will consider you eligible based on various factors that include your age, residential address, monthly income, employment stability, CIBIL score, property status, EMI obligation, etc.
Each of these points plays a significant role in justifying your eligibility to take up the loan. Some situations arise when your credit score gets mismatched, thus leading to disagreement with your loan application. If you find any mismatch on your credit reports, make it corrected with urgency.
Myth 4: Borrowers Don’t Have to Take Responsibility For Property Insurance
Whenever you opt for taking housing loans, you will get to know that the contract mentions the property’s protection against natural disasters like floods, fire, earthquakes, etc. Going by the contract, the lender can have the authority to add the property insurance cost to your borrowed loan.
This will eventually increase your monthly spending since you must reimburse the premium and the EMIs. Therefore, it is most worthwhile to discuss with your lending institution about the insurance to come to a mutual understanding. Otherwise, you are going to lose plenty of money on it.
A home loan is a useful financial product that can pave the way for buying your dream house. Before picking up the lender to make the most suitable home loan, verify your conception to avoid excessive expenses.
