5 Things must do before taking Home Loan

home loan

Buying a home is an emotional decision. Because home is a place where you create memories and this home is your lifelong companion.

Most of the people take the help of home loan to buy a house. But do such people do enough planning before taking a home loan? Are they sure that the home loan they are availing is the best?

Taking a home loan requires research and planning, as it is a lengthy and costly expense. Here we will tell you about 5 mistakes that you should avoid while taking a home loan.

Credit score check

The first essential step before applying for any loan is to have a healthy credit score. Credit bureaus like Experian offer you free and unlimited credit reports, which are easy and convenient to download.

A credit score above 700 can get you a great deal. It will also give you the ability to apply for a loan in the best banks. You can get a loan with a bad credit score, but not with a good deal.

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Lack of good research

Home loans have become quite common and are easily available. With the increasing demand, many financial institutions offer loans to meet your needs.

Hence it is very important to do research before applying for a loan with any institution. Homebuyers need to investigate as per their requirement, plan their finances, check the terms and conditions, identify hidden charges, processing charges and look for flexible repayment options.

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Loan repayment capacity

The biggest mistake that people usually make is not including their monthly expenses while calculating their loan repayment capacity. The bank usually looks at your liabilities while granting the loan.

If your monthly expenses are high and you take a home loan with a higher EMI amount, it can become a huge financial burden. Your EMI expenses should not exceed 30-40 per cent of your income.

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Short term big risk

As far as possible, do not opt ​​for a short term home loan. Because the shorter the tenure, the higher the EMI of the loan. The higher the EMI amount, the higher the risk of default in payment. Conversely, a longer loan tenure will lower your EMI. Although you will have to pay more interest on this, but the burden on your pocket will be less.

Importance of insurance cover in home loan

Home loan borrowers should take proper insurance cover to protect their family from financial crisis. In case of any medical emergency, home loan insurance can help the family clear the dues.

Many insurance products cover home loans. Not securing your liabilities is a risk that most people ignore. It is advisable to take cover to protect your family members from any financial burden.

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