What are some home loan Do’s and Don’ts?

Buying a home is a long-cherished dream for many. Opting for a home loan takes you closer to achieving your dream of buying a house of your choice.

The home loan market is very competitive with there being many lenders offering loans at affordable interest rates. This may sound exciting but when going for a home loan, there are certain do’s and don’ts which you have to be aware of before applying for the loan. This would help you to make an informed choice about affordability, EMIs and related particulars.

Home Loan Do’s and Don’ts

Do’s

Affordability 

The key criterion before selecting a home loan is whether you can afford it and easily repay it. The choice is now more confusing for borrowers due to competitive home loans being offered at attractive terms, so at times it can be tempting to go for a higher loan amount. Always keep your other financial priorities like children’s education, retirement corpus in mind while deciding the home loan amount.

Compare lenders

Conduct proper research and compare the home loan rates and terms offered by different lenders as a home loan is a long-term responsibility. Opt for lenders who offer you the terms most suitable to your financial condition.

Take a joint loan

Adding a co-applicant to a home loan applicant reduces the burden significantly for the borrower in the form of deductions and tax benefits. Women co-applicants also get home loans at a lower rate of interest as compared to male loan applicants. However, co-applicants should be made aware of all the terms and conditions to avoid any confusion in future.

Track your credit score

Keeping track of your credit score is necessary to evaluate your creditworthiness in the eyes of the lender. A credit score of 750 - 900 is considered as most ideal by lenders for getting home loans easily approved at affordable terms.

Don’ts

Forget to read the fine print

It is very important that a home loan applicant goes through the fine print very carefully and understand the related terms and conditions before signing on the dotted line. If needed, take professional help to understand it. This will help avoid any sort of confusion or legalities later on.

Go for a long loan tenure

Don’t go for a very long loan as this would mean a higher outflow of interest creating an additional financial burden. Try to opt for a tenure that would be easy to repay without much interest burden.