Mistakes that Can Result in You Paying More On a Home Loan

Mar 08, 2017

When Ashish and Shikha decided to buy their first house together, they were both over the moon with excitement. It was going to be the first major thing they would buy as a couple. But with all the excitement, came immense worry too. What if they picked the wrong deal or were unable to choose the ideal home loan.

Hundreds of people like Ashish and Shikha live in the fear of having to pay more on their home loans. If you too are concerned about this, here are the 5 mistakes you must avoid so that you don't end up paying more than you should, for your home loan:

  1. Not researching enough: Most borrowers don't research enough when it comes to picking a bank because they usually opt for one that they have been dealing with for other transactions. Different banks and NBFCs offer different deals and you should pick one that suits your needs. You must also consider how long it will take to disburse the loan because that might have an impact on your deal. It is not only vital to consider the interest rates and other fees and charges, as well.
  2. Choosing the wrong deal- Over the last few years, home loans and loans in general, have come up with features that you can customise to suit your needs. For starters, there are several EMI payment schemes that you can choose depending on your capacity to pay. Flexi Emi options have changed the way you make EMI payments for your loan with a huge range of options such as Step-up, Step Down and so on.
  3. Borrowing more than you can pay- How much money is too much money? You might feel tempted to borrow a higher amount than you actually need. But always remember you will have to pay it all back at some point of time. So only borrow as much as you can pay back, to keep the costs down.
  4. Not taking into account the additional costs and charges- When you avail a home loan you must consider costs over and above the EMI to be paid. Most people make the mistake of only considering the EMI that has to be paid. Make sure that you are aware of the additional charges such as Processing Fee, Prepayment Charges etc.

Ashish and Shikha did their research and took time to evaluate which option suits them best. Remember that some amount of effort in this preliminary stage can help you a lot in the long run.